Thank You Millennials
New home construction broke its downward trend and increased significantly in October, according to a new report from the U.S. Census Bureau.
“Housing starts jumped in October – climbing to the strongest pace since 2007 – as multifamily units bounced back sharply from an unusual (and temporary) decline during September,” Nationwide Chief Economist David Berson said. “Single family starts continued their rise as well, as strong demand for owner-occupied housing spurs home construction activity.”
Privately-owned housing starts increased 25.5% in October, up from September’s revised estimate of 1.05 million to 1.32 million. This is also up 23.3% from last year’s 1.07 million.
Single-family housing starts increased 10.7% from September’s 785,000 to 869,000 in October.
But why the sudden increase? Millennials.
“Housing starts are being driven higher by improved household growth as the economy promotes further job and income gains,” Berson said. “With improved employment and income prospects, millennials are an expanding portion of housing demand as they move out of their parents’ homes – increasingly to form families.”
While Millennials haven’t completely taken over the housing market yet, click here to see why it’s only a matter of time.
The number of building permits also increased in October. Privately-owned housing units authorized by building permits increased 0.3% in October to 1.229 million. This is up from September’s 1.225 million, and up 4.6% from last year’s 1.18 million.
Of those, single-family authorizations increase 2.7% from September’s 742,000 to 762,000 in October.
With these increases, it is no wonder that builder confidence remained high in November, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
“Today’s report is a boost of confidence for the housing market, as we haven’t seen a month-to-month leap like this in more than 30 years,” Quicken Loans Vice President Bill Banfield said. “While much of this was driven by the multifamily segment, we cannot overlook the significance of the gains made on single-family home construction – increasing to their highest levels in nine years.”
“Furthermore, continued gains in permits led by the single-family sector keep optimism high as we move toward the winter months,” Banfield said.
Privately-owned housing completions also increased in October by 5.5% from September’s 1 million to 1.05 million. This is up 7.2% from last year’s 984,000.
Single-family housing completions increased 3.9% from 721,000 in September to 749,000 in October.
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