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New Construction Shows Unexpected Growth in October!
The latest housing data shows a surprising increase in new construction activity in October, defying expectations of a decline. This comes as welcome news for the industry, which has been struggling with rising costs and a shortage of skilled labor.
Key Findings:
- Permit issuance: Up 1.1% to a 1.487 million annual rate, exceeding forecasts.
- New housing starts: Increased 1.9% to 1.372 million units, also surpassing expectations.
- Regional variations: Strongest growth in the Midwest and West, while the Northeast continues to lag.
Industry Reaction:
Positive outlook:
Some experts see potential for further improvement in the coming months, citing a decrease in mortgage rates and a low inventory of existing homes.
Balancing act:
Builders face the challenge of enticing buyers while managing rising costs and supply chain disruptions.
Competitive landscape:
New construction enjoys an advantage over resale homes due to the availability of incentives like mortgage buydowns.
Additional Insights:
- The National Association of Home Builders/Wells Fargo Housing Market Index fell in October, reflecting a decrease in builder confidence.
- The Consumer Price Index rose 3.2% year-over-year in October, offering some relief from inflation concerns.
- Mortgage rates dipped to 7.44% in the week ending November 16th, providing a boost to affordability.
Moving Forward:
While the recent uptick is encouraging, the long-term prospects for the housing market remain uncertain. Rising interest rates and affordability concerns continue to pose challenges. However, the current low inventory and strong buyer demand suggest that new construction activity may remain resilient in the near future.
The information provided is for informational purposes only and should not be considered financial advice.