New home building across the United States showed significant growth, equaling a one-year high for October of this year, which industry experts are directly attributing to recovery from damage caused by hurricanes in recent months. New home construction rose by a substantial 13.7 percent to a seasonally adjusted annual rate of 1.29 million units, according to the Commerce Department. That marks the highest level since October 2016. September 2017 sales totals were also modified to 1.135 million units from a previously reported 1.127 million units.
Significant new home building activity in the South region of the United States, which represents almost half of the nation’s residential construction, was deeply affected by Hurricanes Harvey and Irma hitting Texas and Florida in late August and early September. Economists had predicted that housing starts would rise to a pace of 1.185 million for October of this year. New home construction in the South region increased by a substantial 17.2 percent in October, reaching 621,000 units, with single-family construction surging to 16.6 percent to its highest level since 2007. There were also increases for the Midwest and the Northeast.
The increases for new home construction in October put an end to three consecutive months of decreases, as home building has had its challenges during 2017 with land and labor shortages as well as high material costs. A recent industry survey shows confidence among home builders in November is at its highest level since July 2005 due to current sales conditions and buyer demand, but there are still concerns regarding lots, land and the cost of materials.
Single-family home construction, which makes up the largest share of the housing market, increased by 5.3 percent to a rate of 877,000 units in October, which represents the highest level in eight months. Single-family home construction decreased by 22.4 percent in the Northeast and decreased by 7.7 percent in the West, while increasing by 7.8 percent in the Midwest. Groundbreaking on single-family home projects has slowed down since February. During October, groundbreaking for multi-family housing surged by 36.8 percent to a rate of 413,000 units.
The issuance of building permits increased by 5.9 percent to a rate of 1.297 million units in October, the highest level since January. Single-family home building permits increased by 1.9 percent, while permits for the construction of multi-family homes increased by 13.9 percent.
“Home builders are building, and that signals greater confidence in the economy ahead,” said Chris Rupkey, Chief Financial Economist at the financial firm MUFG, to The Wall Street Journal.
Based on the number of permits pulled in Collier, Lee and Charlotte Counties in Southwest Florida over the past year, new construction has been on the rise in Southwest Florida. The tri-county area is forecasted to show a 21 percent increase in permits for 2017. Builders and homeowners are expected to have an estimated 13,000 permits issued for the year. Overall, from October 1, 2016 through September 30, 2017, residential permits in Lee County increased 33 percent. Collier County new construction permits increased to 4,229, which represents a 4 percent increase. Michael Timmerman, a Senior Vice President and Economist with Meyers Research, LLC, says he expects to see “solid growth, which is really what we want to have” in the Florida housing market.