Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Housing Starts, September 20, 2022

A surprising bounce back in new home construction is welcome. In August, single-family housing starts rose 3.4%, thereby stopping five straight months of decline. The inventory of unsold homes and canceled contracts accumulated due to higher mortgage rates. However, the latest month's increase is implying that builders still see profit opportunities even as they concede on prices. Material prices, including that of lumber, have been moderating, and fully completed homes are selling fast. Unfinished homes still under construction are the ones sitting on the market for long periods.

Multifamily housing starts reached its best monthly performance in 35 years. Apartment demand has been strong, with rents rising at a historically high pace. Those consumers unable to qualify for a mortgage at higher interest rates are renewing their rental leases. Job creation is also boosting the rental demand.

There was a housing shortage of around 5 million homes before the onset of the pandemic. That shortage is not going away soon. The near-term single-family outlook is complicated due to high mortgage rates. But the long-term outlook for homebuilders is bright due to the need to build more to fully relieve the housing shortage.