Housing Starts and Affordability are on the Rise
From our recent blogs, we know that, although slow yet steady, the remodeling and housing markets are improving this year. But now joining on that path of improvement are new construction housing starts paired with increased affordability.
According to recent builder surveys, housing markets nationwide have significantly improved over the past six months, resulting in a brighter outlook regarding market conditions.
"The fact that the three-month moving average for housing starts has now increased for nine consecutive months and is approaching the 700,000 mark for the first time since October 2008 is indicative of a solid recovery in housing activity stemming from recent firming in employment and consumer confidence measures,” said NAHB Chief Economist David Crowe.
Posting the biggest gain in housing starts in January with an 18.3% increase, the South, which is the nation's largest regional housing market, is showing the most improvement. The Northeast and West also posted significant gains of 7.9% and 11.9%. Yet the Midwest was the exception to the rule, posting a 40.7% decline that partially offset a dramatic gain in the previous month.
Also, according to recently released figures from the U.S. Commerce Department, the production of new single-family homes and apartments nationwide has increased 1.5% to a seasonally adjusted annual rate of nearly 700,000 units in January 2012. Which then marks this to be the second-best pace of overall housing production since October 2008.
Not only are single-family homes increasing in production, but also the multifamily segment has been continuing to show improvement. Multifamily starts rose 8.5% to a seasonally adjusted annual rate of 191,000 units for the month. Following a 55% increase in starts activity in 2011, the rise in multifamily housing starts then attributed to rising demand for rental apartments in January.
With housing starts increasing, the National Association of Home Builders/Well Fargo Housing Opportunity Index (HOI) revealed that nationwide housing affordability is at its record high. In the fourth quarter of 2011, the housing affordability rose to a record level. HOI data revealed that 75.9% of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, the highest percentage recorded in the 20-year history of the index.
Ranking at the top of the most affordable major housing markets, in descending order are Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.
Other major metro areas respectively near the bottom of the affordability index included Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.
With 2012 starting off with improvements in remodeling and housing markets, housing starts, and affordability; this year is kicking off to a great start! What do you think about these recent statistics?