This story has been updated to reflect new residential construction data released by the U.S. Census Bureau on Wednesday.
The U.S. Census Bureau reports that housing starts fell 11 percent in October from the previous month. Housing permits rose 4.1 percent. Over the past year, economic conditions for homebuilders and homebuilders’ level of optimism about future construction have both improved gradually.
Economist David Crowe at the National Association of Homebuilders said single-family home-building has only recovered about halfway to the level of the early 2000s, before the housing bubble. He said there are still multiple obstacles to full recovery, including current homeowners who have lost equity and can’t move up or out, and young people who have entered adulthood in a poor job market and burdened with student debt.
“They’ve postponed everything in their lives: moving out of their parents’ homes, getting married, having children,” said Crowe. “And all those things drive households towards homeownership.”
As those young people move out on their own or begin to settle down, they do need someplace to live. And that’s driving a continuing boom in new rental-apartment construction, said Laura Williamson at mortgage-servicing firm Digital Risk.
“The builders seem to be upbeat in spite of the headwinds — high costs for land and labor,” said Williamson. “We absolutely see the multi-family market staying strong.” Williamson said single-family starter-home construction remains stagnant, and isn’t likely to pick up much in the near future.
David Crowe of the National Association of Homebuilders said there is one sector of the single-family market that’s very strong now: middle- and high-priced custom homes. He said the median new home being built now is bigger than ever — approximately 2,500 square-feet, with four bedrooms and a two- or three-car garage — at a price point of $250,000 or more.