Single-family construction ticked up in November after hurricanes

Hurricanes in Florida and North Carolina took a bite out of housing construction in October, but things are looking up. The U.S. Census Bureau’s November residential construction report shows single-family starts rising 6.4% compared to last month, clocking in at a seasonally adjusted annual rate of 1,011,000. 

Single-family housing completions also rose to a seasonally adjusted annual rate of 1,038,000, good for a 3.3% rise month over month. However, single-family permits — a leading indicator of starts and completions — rose by only 0.1% month over month to a seasonally adjusted annual rate of 972,000.

Taken together, markets in Florida are driving a rebound after the October hurricanes, but leading indicators point to slightly lower activity in the coming months. And the leading indicators are down year over year, with single-family permits (2.7%) and starts (10.2%) falling. 

“It is clear that there is a lot of pent-up demand in the housing market, and more single-family inventory is needed to meet that demand,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. “The challenge for home builders is not on the demand side. Supply-side factors, including rising costs of materials and labor, along with almost-limited land for development, will be the primary constraints on homebuilders in the year ahead.” 

The new report comes as home builder confidence has leveled off. After three months of increases in sentiment, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) in December stayed flat compared to last month with a reading of 46.

The steady sentiment comes with dueling dynamics for builders in the coming months. High home prices and stubbornly elevated mortgage rates will collide with any policy implemented by the incoming Trump administration.

While builders expect a more favorable regulatory environment after the president-elect is inaugurated, the benefits of that could be offset by broader macro economic factors, particularly if Trump follows through on his threat of high tariffs and mass deportation of immigrants.