According to the November National Association of Home Builders Housing Market Index released This Week in Real Estate homebuilder confidence rose to its highest level since May following October numbers that saw an increase in permits, but a small decline in starts. Additionally, this week, NAR chief economist Lawrence Yun, said in response to inquiries about a bubble in 2022, “the signs are just not there.” Below are a few newsworthy events from the third week of November that influence our business:
Housing Markets Likely to Normalize in 2022, Says NAR’s Lawrence Yun. “All markets are seeing strong conditions and home sales are the best they have been in 15 years,” said Yun. “The housing sector’s success will continue, but I don’t expect next year’s performance to exceed this year’s.” At the moment, home sales are the standout. And although there should be a slowdown going into 2022, said Yun, they will likely remain above pre-pandemic levels. The outcome, however, will largely depend on the influx of inventory, and as mortgages exit the forbearance program, we should begin seeing additional homes enter the market. In terms of a bubble for 2022, the signs are just not there. While home prices have out-priced people’s income overall, said Yun, with value growth matching up to 2005 levels, we don’t have an oversupply situation or risky subprime lending like we did during the last market crash.
Homebuilder Confidence Surges Past Expectations, As Buyer Demand Remains High. Higher prices and longer wait times do not appear to be turning buyers away from the nation’s homebuilders. With demand still surging, homebuilder confidence in the market for single-family homes rose more than expected in November, to the highest level since last May. “The solid market for home building continued in November despite ongoing supply-side challenges,” said NAHB Chairman Chuck Fowke. “Lack of resale inventory combined with strong consumer demand continues to boost single-family home building.”
Housing Starts Flatten, Permits Promise Future Improvement. Residential construction numbers were mixed in October. The U.S. Census Bureau and Department of Housing and Urban Development report an increase in construction permits but a small decline in construction starts. Overall, however, both single-family and multi-family production are running well ahead of their 2020 results. The October permit rate was 3.4 percent above the pace in October 2020. Over the first 10 months of 2021 there were permits issued for 1.439 million residential units, an increase of 20 percent from 1.199 million at the same point in 2020. Single-family permitting has improved 17.3 percent year-over-year to 949,400 units. Permits for multifamily construction are up 27.3 percent for the year-to-date at 446,700 units. Permitting saw the greatest improvement in the West where it gained 8.1 percent and 11.1 percent compared to September and October 2020. Single-family starts fell 3.9 percent from September to 1.039 million from 1.081 million and were 10.6 percent lower than they were in October 2020.
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