Don’t Be Misled by the “Drop” in Housing Starts: Some Markets are Showing Large Increases in Homebuilding

Source:  Metrostudy

The government’s June report on housing starts showed an 11.1% decline, but that was on the heels of an incredibly strong report the previous month.   

We at Metrostudy have just completed another complete count of builder activity and new-home supply in markets all around the nation, and it provides strong quantitative evidence that the demand for new homes is still recovering, albeit slowly.  Furthermore, builders in most markets are confident that this slow-motion rebound will continue.  That is why builder confidence has improved and lot development is up 21.5% compared with a year ago (from the latest Metrostudy research).

The supply of new homes remains tight.  Finished new-home inventory is still at 2.5 months of supply, which is in the historically normal range, but somewhat low for a market that is starting to revive rapidly.  This explains the high rate of price increases on new homes.

There is much more detail available in Metrostudy’s research than is evident in the government data; some markets are actually showing very strong increases in homebuilding.  Here are some of the markets that we have found are increasing home production the most.  The former “bubble” markets figure prominently in this list, reflecting the fact that they had fallen so far during the downturn.

Recently-reported Metrostudy quarterly data, construction of single-family detached homes, versus four quarters ago.