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The housing market is witnessing a recovery as construction of single-family homes and apartments steadily increases. According to the Department of Commerce, builders began construction on 1.173 million units in November, a 10.5 percent increase from October, when calculated at an annual rate. This is welcome news as in October the National Association of Homebuilders (NAHB) released their housing market index (HMI) figure of 62, representing a three-point drop in homebuilder confidence from a month before.
The increase in both single- and multi-family units is a strong intimation that the market could be headed for greener pastures. Multi-family construction increased by 18.1 percent while single-family saw a significant 7.6 percent boost. Building permits also rose, 11 percent from October to November, reaching a yearly figure of 1.289 million.
These increases are potential indicators of widespread home buying activity, which would consequently benefit the economy. Increased homebuilding means construction jobs, more homes means more inventory from which to buy, and buying a home leads to purchasing a plethora of other necessities, such as furniture and lawnmowers, for new homebuyers.
Despite these positives, the market continues to be plagued by notable drawbacks. Affordability is a prevalent topic of discussion, especially among younger buyers, one which when coupled with difficulty obtaining a home loan makes the dream of homeownership seem like just that, a dream. The growth in single-family home construction suggests this tide could be turning, but the even larger rise in multi-family building insinuates the opposite as financial shortcomings prevent families from making the transition from apartment to house.
The future of the housing market is unsure, but with a market in an uncertain state such as ours, we take our good news where we can get them.