Home builders aren’t exactly closing out the year with more enthusiasm, despite a shortage of homes on the market.
According to the U.S. Commerce Department’s new residential sales report, permits to put up new residences fell in November. Permits issued were down 10.4% from October to November and fell approximately 0.9% from permits issued for November 2015.
In light of the blight of inventory available for sale, builder’s permits are considered an important component of calculating the kind of market the industry can expect in the months ahead. The Commerce Department’s report may forecast that first-time homebuyers especially will not receive a reprieve from the construction industry, at least for the time being. New construction has been at a flat line for some time now, most of which is the trepidation that many builders still remember from the crash of 2008.
The impact remains: not enough homes for sale and not enough homes for rent.
Still, industry professionals are not dour about future prospects, knowing that the health of the market requires the economic tensions such as shortages and higher mortgage rates, to provide fiscal stability.
It also makes sense that the construction industry normally slows down during the colder months, December–March.
New construction fell 28.4% from October 2016 and nearly 7.9% from November 2016. Not all the metrics within the report were negative: permits for single-family homes in November increased by 11.6% from 2015, but were down 9.4% from October 2016. The number of new homes that were completed in November also increased by 4.1% from October 2016 and 24.2% as compared with November 2015.
For some within the industry, this will translate into greater pent-up demand for spring 2017.
Scarcity is always a positive factor when selling into a market. Many within the industry are believing that the arrival of the new administration will also reduce the number of regulations, thus reducing overall costs of doing business.