Fewer new homes and apartments are in the pipeline, which may press housing shortages even more in the new year.
Housing production – which includes multifamily and residential – posted a sharp decline in November, dropping nearly 19 percent month-over-month. Overall housing production is now at a seasonally adjusted annual rate of 1.09 million units, the Commerce Department reports. Permits – a gauge of future homebuilding – was also down in November, dropping 4.7 percent.
The latest follows a glowing report in October that showed single-family starts at the highest level in nine years. Still, even October’s high was more than 15 percent below long-run averages.
“People have said to us on many occasions that housing is back to normal,” says Doug Duncan, the chief economist at Fannie Mae. “It’s definitely not normal from a supply perspective.”
The builder’s tradegroup is still predicting single-family production to increase over the coming months. The volatile multifamily sector, on the other hand, is expected to level off at a solid rate “as the market finds balance between supply and demand,” says Robert Dietz, the National Association of Home Builders’ chief economist.
Single-family starts dropped 4.1 percent in November to a seasonally adjusted annual rate of 828,000. Multifamily production plummeted 45.1 percent to 262,000.
Combined single- and multifamily starts posted drops in all four major regions of the U.S. last month, led by the Northeast (a 52.1 percent month-over-month drop), the West (22.1 percent decrease), Midwest (14.2 percent drop), and the South (9.3 percent drop).
Broken out, single-family permits did post a modest 0.5 percent increase to a rate of 778,000 units in November. Multifamily permits dropped 13 percent to 423,000.
“Year-to-date, single-family starts are up 9.6 percent and the overall trend in this sector remains positive,” assures NAHB Chairman Ed Brady. “Builder sentiment is strong and we can look forward to growth in the single-family market in the year ahead as the industry adds workers and lots, and Washington policymakers provide regulatory relief for small businesses.”