Housing Market Beginning To Boom

The housing market strengthened last year, indicating that the recovery will be on solid footing in 2018.

Residential construction improved in 2017. Total housing starts fell 8.2% in December to a seasonally adjusted annual rate of 1.192 million. December’s pullback was all in new single-family construction, which tumbled 11.8%. With December’s data now available, we have our first look at 2017 as a whole. Total starts rose 2.4% to a 1.202 million-unit pace. Single-family starts rose 8.5% last year, climbing steadily since bottoming out in 2011. Multifamily construction kept falling, down 9.8% in 2017.

New-home sales ended 2017 in solid territory and should be stronger still this year. They were down in December, falling 9.3% from November. But overall, the number of new homes sold in 2017 was 8.3% above 2016, a solid year-over-year gain.

Slightly more existing homes should sell in 2018 as inventory struggles to keep up with demand. Existing-home sales fell 3.6% in December to a seasonally adjusted rate of 5.78 million. Stock was down 10.3%, marking the 31st consecutive month of decline. It would take just 3.2 months — a record low — at today’s sales pace to sell all the homes on the market. Existing-home sales were up slightly in 2017 from 2016, but limited supply slowed growth.

Home prices picked up in November, continuing their steady ascent. The S&P CoreLogic Case-Shiller National Home Price Index rose 6.2% in November from a year ago, after a similar gain in October. Greater demand than inventory is driving up home prices. Markets that are seeing the steepest increases are all on the West Coast.

source: kiplinger.com