Housing starts see the biggest increase since 2016

Vidit Saxena
June 22, 2023

Housing starts see the biggest increase since 2016 link

Surge in Construction: Housing starts in May saw a 21.7% jump from April, reaching a seasonally adjusted rate of 1,631,000. This is the biggest increase since 2016.
Inventory Boost: The surge in housing starts is a response to increased sales of new homes and low-existing home inventory, providing a much-needed boost to the inventory-strapped housing market.
Builder Confidence on the Rise: Builder confidence rose 5 points in June, marking the first positive reading on the index in 11 months. This mirrors the increase in single-family permits and starts as builders ramp up production to meet demand.

Multifamily vacancy poised to rise in all major markets link

Rising Tide: Multifamily vacancy rates, currently near pre-COVID levels, are set to increase across all major markets due to an expected moderate recession.
Tech Impact: San Francisco, affected by tech sector job losses and population decline, will see vacancy levels deviate further from historical norms.
Sun Belt Shift: Despite strong household formation, markets like Austin (up 16%) and Dallas (up 8%) will face occupancy and rental growth challenges due to robust supply growth.

Picket's $20M Series B a sign of proptech growth in SFR link

Big Moves in Proptech: Rental property investment platform Picket has closed a $20 million Series B financing round, indicating a growing trend in the single-family rental (SFR) market.
Expanding Services: Picket plans to extend its services to retail investors, leveraging its dashboard functionality and rich-market data to provide a comprehensive investing experience.
Wall Street's Interest: A recent study suggests that institutional investors could control 40% of U.S. single-family rental homes by 2030, highlighting the potential of the SFR market.

Housing Market Tracker: May 2023 link

Surging Demand: Homebuyer interest has skyrocketed, with a 20% increase in demand compared to last year.
Price Hike: The median home-sale price has jumped to a record high of $409,000, a 15% year-over-year increase.
Inventory Drought: The number of homes for sale plunged by 23%, marking the 20th straight month of declines.

Rescue Capital Lines Up for Opportunities on Multifamily Properties link

Rising Tide: Apartment investors struggling with floating-rate construction or bridge loans due to rising interest rates may find relief in "rescue capital" from private equity investors.
High Stakes: Rescue capital, often offered as preferred equity, comes with its own high interest rates. Borrowers may need to contribute more equity to keep their properties.
Market Shift: Borrowers who took out floating-rate, short-term debt just before rates began to rise are feeling the squeeze. Many of these loans are set to come due in the second half of 2023 and early 2024.

Slowing single-family rental price growth is approaching pre-pandemic levels link

Cooling Pace: The U.S. single-family rental market remains robust, but the rate of rent increases has significantly slowed over the past year, mirroring more closely the 2019 market conditions.
Data Dive: In May, U.S. single-family rent increases saw a 3.7% gain, a stark contrast to the 14.2% growth observed in the same month in 2022. Since February 2020, rents have still increased by 26%.
Affordability Challenge: The slowdown in rent growth is causing increases in single-family rents over the past three years to become more or less permanent. This impacts affordability, requiring tenants to allocate a larger portion of their monthly budget to rent.

Even hard hit Western housing markets are stabilizing—just look at KB Home's latest cancellation rate link

Rebound in Progress: KB Home reports a significant drop in buyer cancellation rate from 68% in Q4 to 22% in Q2 2023, indicating a recovery in the housing market.
Builders' Advantage: Homebuilders like KB Home are gaining an edge over the resale market by leveraging their expanded margins to offer competitive prices and incentives.
Investor Confidence: The housing market stabilization has led to a surge in homebuilder stocks, with KB Home's share price jumping 60% year-to-date.

The housing market is so tight that home prices are 44% higher than before the pandemic link

Skyrocketing Prices: The median home price in the US is now around $419,000, a staggering 44% increase from January 2020.
Inventory Drought: There are 39% fewer homes for sale compared to pre-pandemic times, exacerbating the affordability crisis.
Mortgage Hikes: With mortgage rates close to 7%, nearly double from two years ago, the housing market is becoming historically unaffordable.

California Home Sales Down 23.6% YoY in May, Median Prices Decline 6.4% YoY link

Market Shift: California home sales experienced a significant drop of 23.6% YoY in May, indicating a potential cooling in the housing market.
Price Dip: The median home price in California declined by 6.4% YoY, a noteworthy shift in a market that has seen consistent growth.
Inventory Mystery: The article highlights that California doesn't report monthly inventory numbers, leaving some uncertainty about the supply side of the market.

U.S. Single-Family Rent Growth Continues to Slow While BTR Demand Flourishes link

Cooling Growth: Single-family rent growth has slowed to 3.7% year over year in April, a significant drop from the 14% growth seen in 2022.
Outpaced by Costs: The costs associated with single-family home rentals are now surpassing the rate of rent growth.
Vegas Exception: All markets have seen single-digit growth, with Las Vegas being the only exception, experiencing a less than 1% decrease.

These 10 Metro Areas Have Highest Housing Shortages Relative To Job Growth link

Surging Demand: The job market boom in major metropolitan areas is causing a surge in housing demand that outpaces new construction.
Top of the List: New York City leads with a job-growth-to-building permit ratio of 31.4, pushing housing costs higher and making affordable housing harder to find.
Under-Building Issue: Under-building relative to population growth is also a factor, resulting in a shortage of 6.5 million homes under construction relative to household formation.

Here are the cities if you are wondering,

or to participate.