Home construction finished the year with the biggest bang since 2006 with 1.669 million units started for construction in December (annualized). That means the worst of the housing shortage could soon come to an end. More inventory is clearly needed to lessen the heat of multiple offers and the consequent frustration of multiple losing bids. Homebuilders rightly favored single-family units over multifamily condominiums and apartments. Single-family units started at 1.338 million were 28% above one year ago, while multifamily units of 331,000 were 39% lower. Consumers, in light of the pandemic and work-from-home flexibility, have shown a preference for larger-sized homes.
For 13 straight years prior, homebuilders have been underproducing below historic norms. Therefore, it will take robust home construction this year and next, at a minimum, to fully supply the market to properly meet the demand. More construction also means more local job creation. The housing sector looks to lead the economy in recovery in 2021.