New Construction Surges, Could Help the Housing Market
New-home construction saw a substantial surge in November amid the persisting housing shortage in the nation. According to Tuesday’s report from the Census Bureau, single-family home starts reached a 19-month high, totaling 1.145 million units—an 18% increase from October and a notable 9.3% rise from November 2022. Capital Economics property economist Thomas Ryan emphasized the ongoing support for newbuild demand and construction activity in November, attributing it to the pronounced scarcity of existing inventory in the market.
According to Axios, mortgage applications jumped 21.8% in November, compared with a year ago, the Mortgage Bankers Association reported Tuesday.
“Lending on new construction has been the one bright spot in an otherwise slow year for purchase originations,” MBA chief economist Mike Fratantoni said in a statement.
Even more good news for the housing market? While mortgage rates remain elevated based on recent historical levels, the average 30-year fixed-rate dipped below 7% last week after topping out around 8% in the fall, according to Freddie Mac.
Yes, but: New home activity is not evenly spread out.
“Most of the housing starts were in the South as hybrid work continues to be a boon for households seeking lower cost of living,” notes Jeffrey Roach, chief economist for LPL Financial.