In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses the latest housing starts data.
- Housing starts fell 3 percent in November from the prior month, settling at 861,000 units. Still, new construction activity marks the second highest level during President Obama’s term.
- Single-family units fell 4 percent over the month (while up 23 percent from a year ago), while multifamily units declined 1 percent (up 19 percent from a year ago).
- Household formation is finally bursting out this year after a prolonged period of suppression from 2008 to 2011. Based on current 1 million net new household formations, housing starts should be closer to the long-term historical average of 1.5 million new units. Today’s housing starts are well below that. So the decline in vacancy rates for apartments and single-family homes will continue to fall going into next year. Rent increases could therefore strengthen while home prices will move higher.