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Affordability

Falling November New Construction Don’t Slow 2017 Momentum

By Ralph McLaughlin | December 19, 2017
  • Homebuyers hoping for a large boost in new housing supply as a holiday gift are likely disappointed with today’s homebuilding numbers, as both permits and completions were down in November. However, they should despair not: each indicator – permits, starts, and completions – is on pace to finish 2017 at higher levels than last year, which should help boost inventory in 2018.
  • While it may be hard for homebuyers to notice, new home completions – which provide tangible inventory for homebuyers – are on track to finish the year at a post-recession high. However, there is much room for growth, with completions sitting at just 65% of their 50-year average.
  • Despite the fall in permits and completions in November, homebuyers have reasons to be optimistic that new supply will continue to pick up in the new year. Not only is homebuilder confidence at an 18-year high, annual permits in 2017 – which represent future supply – are also on track to be the most since the Great Recession.

New housing permits and completions were both down over the month in November dropping by 1.4%, and 6.1%, respectively, while starts ticked up a statistically insignificant 3.3%. This puts permits, starts, and completions at 69.8%, 66.5%, and 59% of their 50-year average, respectively. Homebuyers hoping for a large boost in new housing supply as a holiday gift are likely disappointed with today’s homebuilding numbers. However, they should despair not: each indicator – permits, starts, and completions – is on pace to finish 2017 at higher levels than last year, which should help boost inventory in 2018. While it may be hard for homebuyers to notice, new home completions – which provide tangible inventory for homebuyers – are on track to finish the year at a post-recession high. However, there’s much room for growth, with completions sitting at just 59% of their historic average.

What does 2018 hold? Promise. Despite the fall in permits and completions in November, homebuyers have reasons to be optimistic that new supply will continue to pick up in the new year. Not only is homebuilder confidence at an 18-year high, annual permits in 2017 – which represent future supply – are also on track to be the most since the Great Recession. However, the homebuilding recovery has proven to be slow and steady, so homebuyers will need to continue to exercise patience in the years ahead until a healthy stream of new inventory arrives.