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16 February 2018
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| Home construction (The Total Investment & Insurance Solutions) |
Groundbreakings on new homes jumped 9.7 percent last month to the
highest level since October 2016, welcome news for a housing market struggling
with a shortage of homes for sale. The
Total Investment & Insurance Solutions
The Commerce Department said Friday that housing starts came in at an
annual pace of 1.33 million in January, up from 1.21 million in December and
1.24 million in January 2017. Construction of single-family homes rose 3.7
percent. Construction of apartments and condominiums shot up 19.7 percent, the
most since December 2016. The Total
Investment & Insurance Solutions
Home construction soared 45.5 percent in the Northeast, rose 10.7
percent in the West and grew 9.3 percent in the South. But homebuilding dropped
10.2 percent in the Midwest. The Total
Investment & Insurance Solutions
Building permits, an indicator of future construction, rose 7.4 percent
in January.
A strengthening economy has given more Americans the confidence to shop
for homes. But despite last month's uptick, builders haven't been putting up
homes fast enough to meet demand. The
Total Investment & Insurance Solutions
A shortage of houses on the market has driven up prices and blunted
sales. Standard & Poor's reported last month that U.S. home prices rose 6.2
percent in November from a year earlier, according to its CoreLogic
Case-Shiller national home price index. And sales of existing homes fell 3.6
percent in December, though sales rose slightly for the full year 2017 from
2016, according to the National Association of Realtors. The Total Investment & Insurance Solutions
Meanwhile, mortgage rates are creeping up. The rate on the benchmark,
30-year, fixed-rate mortgage rose to 4.38 percent this week, the highest level since
April 2014. The Total Investment &
Insurance Solutions
Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted that
apartment construction is notoriously volatile and likely would drop in
February after the January surge. The
Total Investment & Insurance Solutions
Construction of single-family homes in January was "much less
exciting ... the underlying story here is that housing construction is grinding
slowly higher, and likely will continue to do so through mid-year at
least," Shepherdson wrote in a research note. "Higher mortgage rates
are likely to become a problem later in the year." The Total Investment & Insurance Solutions
Still, builders are optimistic about the outlook for housing. The
National Association of Home Builders/Wells Fargo builder sentiment index
released Thursday read 72 for the second straight month in February, just shy
of the 18-year high for optimism recorded in December.
Readings above 50 indicate more builders see sales conditions as good
rather than poor. The index has been above 60 since September 2016.The Total Investment & Insurance
Solutions
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