U.S. housing starts grew last month to the highest level in over a year, a sign that builders and developers are back on track after hurricanes Harvey and Irma wreaked havoc on residential construction in the Southeast U.S.
According to the U.S. Commerce Department, housing starts increased 13.7% from September to October to a seasonally adjusted annual rate of 1.29 million. In addition, residential building permits, a key signal for projected development, grew 5.9% to an annual pace of 1.297 million.
Multifamily starts saw a 37% increase and single family starts rose 5.3% from the previous month. October starts for single-family homes in the South are now at the highest level in a decade, increasing 16.6% from September.
“The following trends are likely to continue as multifamily developers scale back new luxury development and single-family projects continue to increase in response to increasing wage growth, low unemployment, and rising demand” said Keith Knutsson of Integrale Advisors.
Currently, the political climate on capitol hill is an important aspect of property development. A recent House bill proposes to cut the amount of mortgage interest that is deductible and the Senate bill would eliminate the deduction for state and local taxes, both of which could lower demand for expensive property. Stipulations in the House bill could also significantly reduce affordable housing production and have an impact on multifamily demand.
Labor shortages, rising cost of land, and increasing land-use regulations have helped create a shortage of home inventory. As a result, these factors are driving up home prices faster than wages and inflation. Last month, the National Association of Realtors reported that homes are spending an average of 3-4 weeks on the market, the shortest period in over thirty years.
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