It’s not all bad news, in fact, in a strange turn of events, multifamily starts rose- a sector that has been limping along. Housing completions are up across the board as well meaning projects aren’t just getting started then sitting there. Housing completions mean vendors and subcontractors are getting paid which can be tricky in this environment of extremely difficult financing.
Also surprising was the volume of building permits issued which rose 16.7% from November, also breaking with economists’ expectations. This rise is the largest since April 2010 and multi family permit issuance rose to its highest since November 2008.
Multi family is seeing an upturn as home ownership rates are chipped away at by continuing high foreclosure rates and general buyer apprehension.
So is it good news or bad news?
In this environment where we’re still in a relatively over inventoried marketplace as a nation, it is actually better to see stable housing starts (which I would argue they are getting close to as rise and falls this past year have mostly been single digit).
The short term impact is negative on the construction sector but the silver lining for them is that permit applications and issuances are on the rise, so the hammers won’t stop swinging soon. With completions on the rise, construction workers can more readily finish one project and move to the next which helps their bottom line.
I would argue that the new home sector is down considerably over the years but is currently stable and looking up and builders’ confidence levels tend to agree.