Dec 19, 2023 - Economy

Housing starts jump: Low housing inventory entices builders

Illustration of a repeating pattern of houses made out of hundred dollar bills.

Illustration: Aïda Amer/Axios

New-home construction surged in November as the nation continues to grapple with a housing shortage.

Driving the news: Single-family home starts hit a 19-month high of 1.145 million units in November, the Census Bureau reported Tuesday.

  • That was up 18% from October and 9.3% from November 2022.

What they're saying: "The extreme lack of existing inventory on the market continued to support newbuild demand and construction activity in November," Capital Economics property economist Thomas Ryan wrote Tuesday.

Meanwhile, mortgage applications jumped 21.8% in November, compared with a year ago, the Mortgage Bankers Association reported Tuesday.

  • "Lending on new construction has been the one bright spot in an otherwise slow year for purchase originations," MBA chief economist Mike Fratantoni said in a statement.
  • Even more good news for the housing market? While mortgage rates remain elevated based on recent historical levels, the average 30-year fixed-rate dipped below 7% last week after topping out around 8% in the fall, according to Freddie Mac.

Yes, but: New home activity is not evenly spread out.

  • "Most of the housing starts were in the South as hybrid work continues to be a boon for households seeking lower cost of living," notes Jeffrey Roach, chief economist for LPL Financial.

The bottom line: Existing inventories are still extremely tight, but the housing market is showing signs of life.

Go deeper: Mortgages dip below 7% after the Fed hints at rate cuts

Go deeper