Good news for the housing market is good news for CE pros. Last month, a National Association of Home Builders (NAHB) and Wells Fargo index of homebuilder sentiment held near the highest level of the year, with over 50 percent of respondents reporting good market conditions.
A recent Commerce Department report backs up that data. The report shows new home construction in the U.S. has jumped to a nine-year high as of October 2016 as a result of both an advance in the number of new apartment projects as well as a strong pickup for single-family housing.
In total, residential starts grew 25.5 percent to a 1.32 million annualized rate, which is the fastest growth the market has seen since August 2007, before the financial crisis.
Single-family home construction rose 10.7 percent to an 869,000 rate, the highest since October 2007.
These numbers exceeded the highest projection in a recent Bloomberg survey.
“Homebuilding is in a steady recovery,” says Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Ala., who had the highest forecast in the survey. “The fundamentals for demand are in good shape.”
Several things could be driving this demand, such as increased hiring and healthier finances. However, a sustained pickup in borrowing costs as well as rising housing prices could discourage first-time buyers.
MDU Growth Surges
According to the report, multifamily home building is up a whopping 68.8 percent.
Work on multifamily homes, such as townhouses and apartment buildings, jumped to an annual rate of 454,000 from 269,000 a month earlier.
While CE pros have been waiting for the single-family home market to pick up since the recession, this growth could indicate that many are choosing to buy condos in MDUs instead. If so, integrators should start looking to increase MDU capabilities and projects.
And it looks like these nunbers could continue to grow. Permits, a proxy for future construction, increased 0.3 percent to a 1.23 million annualized rate, even though they were projected to fall.