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US housing demand is one the rise, but faces headwinds

Single-family housing starts in the US continued to climb in September, showing an increase of 8.5% to a 1.11 million seasonally adjusted annual rate, the highest pace since June 2007.

According to a report from the US Department of Housing and Urban Development and the US Census Bureau, overall housing production increased 1.9% to a seasonally adjusted annual rate of 1.42 million units. This figure reflects the number of housing units builders would begin if they kept this pace for the next 12 months.

The multifamily sector, which includes apartment buildings and condos, decreased 16.3% to a 307,000 pace.

“The housing market remains a bright spot in the US economy, and this is reflected in the positive housing starts report,” says NAHB Chairman Chuck Fowke. “Builder confidence is at an all-time high as buyer traffic is strong - another sign that housing is helping to lift the economy.”

NAHB chief economist Robert Dietz adds, “Home sales have exceeded for-sale home construction recently, which means additional home building in the near term. Demand is being supported by low interest rates, a suburban shift in demand and demographic tailwinds.

”However, headwinds due to limited building material availability is slowing some construction activity despite strong demand, with authorised but not started single-family homes up 22.4% compared to a year ago.”

On a regional and year-to-date basis (January through September of 2020 compared to that same time frame a year ago), combined single-family and multifamily starts are 11.0% higher in the Midwest, 5.7% higher in the South, 4.5% higher in the West and 1.4% lower in the Northeast. Overall permits increased 5.2% to a 1.55 million unit annualized rate in September. 

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