A Strong February for Single-Family Starts

Single-family starts grew in numbers this February according to estimates from the Housing and Urban Development and Commerce Departments. The great start stems from builder confidence and low mortgage rates.

The Federal Reserve rolled out an emergency rate cut making rates hit a historic low. Currently, the benchmark interest rate range is 1% to 1.25%. Freddi Mac reports an average 3.45% for a 30-year fixed-rate mortgage and 2.95% average for a 15-year fixed-rate mortgage. What does this mean for

the housing market? Potential buyers who are just on the verge of purchasing a new home will now have a great incentive to jump on the opportunity.

The Single-Family Housing Starts and Builder Confidence is shown in a graph depicting the 3-month moving average. According to the graph, the 3-month average for single-family construction is higher than post-recession high. The single-family starts showed an increase of 6.7% making it a 1,072,000 seasonally adjusted annual pace in February.

Builder confidence is going strong with construction at a fast pace due to warmer weather. There were 539,000 single-family homes under construction reported in the month of February 2020. The numbers look as though they do not reflect a rise, however, they are making up for the declines seen in early 2019. Other sectors are also seeing an increase. Currently, there are 683,000 apartments under construction which is 12% up from this time last year. This also marks a post-Great Recession high for apartment construction.

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NAHB’s Analysis Shows Gain in Custom Home Building for 2019

Low Mortgage interest rates have supported a surge in custom home building in the fourth quarter of 2019. The NAHB’s analysis of Census Data from the Quarterly Starts and Completions by Purpose and Design survey revealed that custom home building increased at the end of 2019.

The US Census Bureau’s Survey of Construction (SOC) is a survey conducted by the US Census Bureau and partially funded by HUD (Department of Housing and Urban Development). The SOC reports up to date national and regional data on housing starts, completions and characteristics of all residential housing. The data which is collected includes the start date, completion date, sales date, sales price (single-family houses only), and physical characteristics of each housing unit, such as

square footage and number of bedrooms. The Quarterly Starts and Completions by Purpose and Design is based on the Building Permits Survey and from the Survey of Construction (SOC).

The National Association of Home Builder’s analysis shows 44,000 total custom building starts during the fourth quarter of 2019. This is a 16% gain over the same quarter in 2018 which totaled to 38,000 total custom building starts. Data shows a solid gain occurred during the last four quarters with custom housing starts totaling to 177,000.

The custom home building market will continue to expand with demand from both owner and contractor built homes. The low mortgage interest rates will protect the custom home building market thus maintaining the positive custom home building outlook.

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