The latest figures raise the likelihood that homebuilding, which accounts for about 3 percent of the economy, dragged down gross domestic product growth in the third quarter for a second straight period in the U.S. While hiring is solid and mortgage costs are near historical lows, faster wage gains and broader access to credit would boost sales and encourage developers to break ground on more residences.
Residential construction may have been a drag on growth in the third quarter, claimed by; an economist at HSBC Securities USA Inc. in New York named Ryan Wang. Multifamily construction is starting to level off, though single-family still seems to be on a gradual growth trend. Work on multifamily homes, such as townhouses and apartment buildings, slid 38 percent to an annual rate of 264,000. This weakness in the multi-family homes units is what is causing the harm to the U.S. housing market. Data on these projects, which have led housing starts in recent years, can be volatile. Starts on structures with at least five units were the lowest since June 2013.
Estimates for total housing starts in the survey reports of economists, which ranged from 1.1 million to 1.2 million. The previous month was revised to 1.15 million from a 1.14 million pace.
Permits increased to a 1.23 million annualized rate. They were projected to rise to a 1.17 million pace after 1.15 million the prior month, according to the survey. The jump in permits is another sign that single-family homebuilding is still growing.
Single-family house construction rose 8.1 percent to a 783,000 rate, the most since February, from 724,000 the previous month. Three of four regions posted a decline, led by the Northeast with a 36 percent drop, the report showed. Claims in the West were unchanged.
The National Association of Home Builders/Wells Fargo index of homebuilder sentiment eased in October from an 11-month high in the prior month, figures showed on Tuesday. A measure of the six-month outlook for sales climbed to the highest in a year.
Prospective buyers, while benefiting from low borrowing costs, are finding credit isn’t easily accessible across the board and there aren’t enough affordable properties to choose from. On the supply front, builders have announced that construction is being constrained by the limited availability of lots that are ready for building, and a shortage of skilled workers. This is without a doubt a downfall for the housing market.
In regards to multi-family housing, in the past this wasn’t the case, as the BDC Network represents some interesting trends. An expected 351,000 multifamily units began in 2014, up about 14% more than 2013 and more than twofold the 6.6% development rate for aggregate lodging begins a year ago, as indicated by the National Association of Home Builders. In Nashville, multifamily fulfillments hopped around 70%, as per business land financier Marcus and Millichap. Fulfillments in Seattle were at their largest amount since 2000. Dallas’ 19,000 culminations drove the country, with Austin, Texas, and New York City, each with 14,000, hot on Big D’s heels. Phoenix’s 4,900 units may at long last make a mark in an opportunity rate that in 2014 was as low as it had been in seven years.