Single-Family and Multifamily Ends 2021 With Strong Demand for New Construction

 

The U.S. Department of Housing and Urban Development and the U.S. Census Bureau reported that both single-family and multifamily production increased 11.8% to an annual rate of 1.68 million units. The strong production stems from the high demand for new construction in the housing industry.

This means that 1.68 million homes will be started in the development stage if this pace kept up for the next year. Separated out, single-family increased to 11.3% to 1.17 million seasonally adjusted annual rate and multifamily increased 12.9% at a 506,000 seasonally adjusted annual rate.

Compared to the same time frame of 2020, on a regional and year-to-date basis (January through November of 2021 compared to that same time frame a year ago), combined single-family and multifamily starts are 24.4% higher in the Northeast, 9.6% higher in the Midwest, 15.4% higher in the South and 19.4% higher in the West.

As far as permits, they increased 3.6% to 1.17 million. Single-family permits rose 2.7% to 1.10 million and multifamily increased 5.2% to 609,000 annual paces.

“Mirroring gains in the HMI reading of builder sentiment, single-family housing starts accelerated near the end of 2021 and are up 15.2% year-to-date as demand for new construction remains strong due to a lean inventory of resale housing,” said NAHB Chairman Chuck Fowke. “Policymakers need to help alleviate ongoing building material supply chain bottlenecks that are preventing builders from keeping up with buyer demand.”

“Breaking an eight-year trend, in recent months there have been more single-family homes under construction than multifamily units,” said NAHB Chief Economist Robert Dietz. “Moreover, despite some cooling earlier this year, the continued strength of single-family construction in 2021 means there are now 28% more single-family homes under construction than a year ago. These gains mean single-family completions will increase in 2022, bringing more inventory to market despite a 19% year-over-year rise in construction material costs and longer construction times.”

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Biden Administration To Cut Payments on Government-Backed Loans

The COVID-19 pandemic has hurt our economy and the well-being of our country tremendously. July 2021 the administration announced that there will be new loan modification options for those who have government-backed home loans. Biden's administration wants to give borrowers the opportunity to catch up or keep paying their mortgage payments due to the struggles the pandemic has caused.

The Federal Housing Administration (FHA) insured mortgages will be eligible to receive up to a 25% reduction on their principal and interest. You do have to be impacted by COVID-19 in order to receive help. In exchange, borrowers will have the life of their loan extended in order to be able to make lower monthly payments.

Those who have a loan back from the Department of Agriculture will receive up to a 20% reduction on their principal and interest. Ways borrowers can do this is to have an interest rate reduction, term extension and a mortgage recovery advance. Again, borrowers will need to be reviewed to make sure they qualify.

For VA loans there is a new COVID-19 Refund Modification which will have many tools that can help borrowers to obtain up to a 20% savings on their monthly principal and interest.

If you are in the market for a home, now is a good time to purchase. Find a professional Realtor in your area. For more information on any relief, assistance visit consumerfinance.gov/housing.

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New Home Sales Rise the First Month of 2021

The Census Bureau and HUD reported a 4.3% increase in January for new single-family home sales to a 923,000 seasonally adjusted annual rate. January sales overall saw a rate of 19.3% higher than January 2020.

The increase comes from the current housing demand as homeowners are still spending the majority of their time in their homes. Lower interest rates still also play a part but according to data gathered,  Housing affordability headwinds will increase in 2021, due to price growth and mortgage rates trending higher.

As for inventory, it is still lagging behind. In January sales-adjusted inventory levels were at a 4 months’ supply. January 2021 saw a 5.5% lower increase in count than a year ago. For new home inventory that has not started yet has increased 45% over the last year from 56,000 to 81,000.

The higher cost for building materials has caused a rise in housing affordability coming into 2021. The media sales price at the beginning of the year saw a 5.3% gain for just a year ago to $346,000.

If you are in the market are considering purchasing a home, now is a good time before prices and mortgage rates rise. A smart move is to contact a Realtor in your area who can help you find the right home for you.

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