The results blow past the estimates
Now add a staggering pandemic and fast-forward 10 months. Despite temporary shutdowns in some areas and historically high surges in unemployment, the combination of historically low interest rates and soaring demand saw single-family housing starts in September hit a rate of 1.1 million, according to figures released Oct. 20 by the U.S. Department of Housing and Urban Development (HUD) and the Census Bureau.
Of that report, Dietz says now: "Demand is being supported by low interest rates, a suburban shift in demand, and demographic tailwinds. However, headwinds due to limited building material availability is slowing some construction activity despite strong demand, with authorized but not started single-family homes up 22.4% compared to a year ago."
Those headwinds again. Despite them, new home starts have reached the level NAHB economists said in January demographics indicate would support and then some, and new-home sales have been similarly strong.
On Oct. 26, the Census Bureau and HUD said September sales of newly built homes were at an estimated annual rate of 959,000 units, soaring past that estimate of 708,000 made at the beginning of the year and helping to drive the median sales price up to $326,800.
Soaring new-home sales reflect the greater market
That sales clip was more than 30% faster than September 2019, as the new construction market continues to reflect the frenzied activity in the much larger market for existing single-family homes. The National Association of Realtors (NAR) reported on Oct. 22 that existing home sales grew for the fourth consecutive month in September to a seasonally adjusted annual rate of 6.54 million -- up 9.4% from the prior month and nearly 21% from a year ago.
The NAR said the median existing-home price was $311,800, up nearly 15% from a year ago. Total housing inventory was at 2.7 months, another record low.
Looking ahead, the NAHB reports builder confidence is at a record high, understandably enough given the high rates of both construction and sales.
Also at record highs, however, are prices for lumber, which the NAHB said has added an estimated $16,000 to the average price of a new home.
That could cut into the profits that a new home would bring, but then, if demand continues at its current pace and home prices continue rising, investors may hardly feel that extra cost, whether they're building a home to sell or occupy.