Fewer newly constructed abodes were finished in November—which means not enough of these badly needed residences hit the market, according to the seasonally adjusted numbers in the latest residential sales report jointly released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Only about 1.116 million new homes were finished in November, according to the report. That’s down 6.1% from October and represented a 7.2% drop from November 2016.
(Realtor.com® looked only at the seasonally adjusted numbers in the report. These have been smoothed out over 12 months to account for seasonal fluctuations in the housing business.)
“That’s not a good sign for the spring market,” says Joseph Kirchner, realtor.com’s senior economist. But “hopefully, that is just a temporary decline.”
Kirchner notes that these numbers tend to fluctuate quite a bit month to month, and these are within the “normal” range of variation.
Permits dipped 1.4% from October to November but were up 3.4% over the same month in the previous year.
For single-family abodes, they rose about 1.4% over October and 9.7% year over year. For buildings with five units or more (e.g., co-ops, condos, and apartments), they fell 8.8% on a monthly basis and dropped 7.7% on an annual basis.
Housing starts, which indicate construction that’s been started but not completed, reached their highest level in the decade. They were up overall 3.3% from October and jumped 12.9% from November 2016.
“The increases in single-family permits and starts show that builders are planning and starting new construction projects,” Kirchner says. “That’s a good thing because it will help to relieve the shortage of homes on the market.”
But it’s important to note that new homes cost about 26.6% more than existing (previously been lived in) ones in October. The median new home price was $312,800 in October, compared with $247,000 for an existing abode, according to the most recent new-home sales Census/HUD report and the most recent National Association of Realtors® report.
“If this rising trend [of more building permits and starts] continues, the worst of the supply shortage could soon end, which would help slow price appreciation in 2018,” Lawrence Yun, NAR’s chief economist, said in a statement. “That would be a huge, welcoming relief for renters seeking to become homeowners.”
Courtesy of realtor.com and credit to Clare
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