The February numbers for new residential developments were just released and were surprisingly low. Overall, new housing starts were down 7%, annualized to a total of 1.24 million. This is down from a January annualized total of 1.33 million. The interesting fact is that decline was experienced in multi-family housing, not single-family housing, which actually saw an uptick of 2.9%. Single-family housing does make up for 70% of all new construction. Multi-family housing is a lot more volatile, so it is difficult to ascertain if this will be a trend.
As I have discussed numerous times in various other blog articles, available housing inventory, in Oakland County, Michigan, and around the country is in very short supply. Thus, new housing starts are needed to help balance the market. That being said, even as we experience a slight drop from expectations, the numbers are still at a 10-year high. We are still experiencing a resurgence from the recession, and strong employment numbers and rising wages are helping to combat the rising interest rates.
Although the housing market is strong, builders’ confidence is at a 4-month low. Overall confidence is nearly the highest in decades, but concerns are growing regarding increased interest rates, availability of laborers, increased material costs, and availability of buildable lots.