Only 3 major metros saw new construction increases in 2019
While February’s Housing Market Index revealed a small dip in homebuilder confidence, the overall takeaway is that sentiment levels are still high.
In fact, according to the National Association of Home Builders and Wells Fargo, the last three monthly readings mark the highest sentiment levels since December 2017.
The latest Housing Health Report from BuildFax reflects that. The housing data and analytics company released its latest report on Tuesday and stated that year-over-year increases in single-family housing authorizations exceeded 6% from December 2019 to January 2020. The trailing three-month outlook grew 6.8%, according to the report.
“Housing activity has started on strong footing this year, which should be welcome news for the broader economy. The housing market, which accounts for a substantial portion of U.S. GDP, has the potential to drive increased growth, providing a balance to any concerns of a sluggish market heading into 2020,” BuildFax Managing Director Jonathan Kanarek said. “While we’re still experiencing some growing pains regarding the recent housing shortage, as more inventory becomes available, we might see the housing market growing at an even faster pace.”
That said, there are certainly areas of the U.S. that are still sluggish in terms of new housing construction. According to the report, only three major metros saw increases.
“On a 12-month rolling basis, new construction, which encompasses both single- and multifamily housing authorizations, decreased across almost all major metros year over year,” the report states. “Only three metros—Chicago, Philadelphia, and New York—experienced increases.”
Chicago’s construction growth sits at 2.14% for 2019, while Philadelphia more than tripled that figure with a 14.33% increase in new construction. However, both cities’ growth didn’t come anywhere near New York, which saw almost 60% growth.
According to the report, the first two cities’ construction increases are not out of the ordinary for their respective markets, but New York is, in the words of Buildfax, “experiencing a construction boom.” The report attributes some of this to construction activity throughout Queens and the Bronx.
And while other large cities aren’t seeing this type of growth, the report shows that maintenance activity is strong across almost all major metros.
“The healthy growth in maintenance activity is a good sign for the broader economy because this could also be attributed in part to homeowners prepping their property for resale,” the report states. “As the housing stock dwindles and home prices skyrocket, an increase in existing home sales would help ease some of the shortage concerns. On the other hand, growth in maintenance activity may be a result of homeowners feeling locked into their existing properties due to increased competition in the housing market.”
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