After some weakness in mid-2013 the homebuilding recovery now seems to be back on track.
According to USA Today, housing starts rose almost 23% in November 2013, their highest level in more than five years and further demonstrating the housing market's growing strength.
This is not necessarily a national resurgence as various markets came out of the housing recession earlier while others still lag behind. One such area is the Atlanta housing market which has shown a slower recovery than markets such as Austin, Houston, and Phoenix. According to Metrostudy’s proprietary “boots on the ground” third quarter 2013 field research, Atlanta new home starts increased by 76% annually, and closings were up by 37% in 2013. Third quarter quarterly starts were up by 71% year over year and even increased above last quarter by 10%. Quarterly new home closings were up by 46% year over year and jumped above the previous quarters closings by 19%.
says, "While the final numbers for single family home starts in 2013 are not yet in, it is expected to be nearly 14,000 units, up from 8,000 in 2012. Projections for 2014 are in the 18,000 to 22,000 range. Right now, our builder members are having a hard time keeping up with the demand," he added. Ellis explained that with the increase in home starts there are several challenges builders are facing to get their operations going. Unlike pre-recession times, contractors are not building spec homes. It is a build-on-demand environment due to bank funding and building loan restrictions as well as avoiding an over supply of inventory. In addition, they are dealing with a diminished number of sub-contractors, laborers and suppliers.
So what does this mean for the our industry? With this housing market resurgence the nursery industry is certain to see a resurgence as well. However, trends seen in the housing industry normally impact our industry 12 to 18 months downstream.
Dr. Charlie Hall, industry economist, poses the questions that just because some economic indicators are back to where they were before the recession, it that necessarily a good thing? Well it depends. In his Charlie's Angle Season 3 session titled "Look Out for the Pothole" he shares his perspective and suggestions for positioning your business for the expected "pothole" in the road ahead. Although some adjustments (or corrections) are predicted mid-year 2014, he says it will be nowhere near the downturn we saw during the Great Recession. This
correction will mainly stem from the drawdown anticipated by the Federal Reserve who is currently injecting 85 billion dollars a month into the economy - a big shot in the arm. Hall suggests that around 2018 or 2019 when they begin drawing this economic support back we may see the next sizable recession, but in the interim we will see modest growth. For a look at this informative video go to americanhort.theknowledgecenter.com.
Housing Growth Reports and Resources
Nov. housing starts highest since Feb. 2008
Housing starts rose almost 23% last month, touching their highest level in more than five years and further demonstrating the housing market's growing strength. Housing starts hit a seasonally adjusted annual rate of 1.09 million undefined topping October's revised estimate of 889,000 undefined and rising about 30% from the year before, the Commerce Department reported. November's rate was the highest since February 2008 and marked only the second month in the past four years that the annual rate cracked the 1 million mark. Single-family home starts reached their highest level since March 2008 at 727,000 undefined still far below normal undefined but up almost 21% above the revised October figure. READ MORE
U.S. housing starts surged to their highest in nearly six years in November
U.S. housing starts surged to their highest in nearly six years in November, a sign of strength in the economy that underscores the Federal Reserve's decision to start cutting back its monthly bond purchases. The Commerce Department said on Wednesday housing starts jumped 22.7 percent, the biggest increase since January 1990, to a seasonally adjusted annual rate of 1.09 million units. That was the highest level since February 2008. READ MORE
November Housing Starts Up 22.7% To Five-Year High
Groundbreaking on new homes was 26.9% higher in November than one year earlier, and 22.7% higher than in October, the Commerce Department said on Wednesday, indicating that the housing market continues to recover. READ MORE
Wall Street Journal
US Housing Starts Up 22.7% in November
A key gauge of home construction surged in November to its highest level in nearly six years, the latest sign of renewed momentum in the sector's recovery. U.S. housing starts rose 22.7% from October to a seasonally adjusted annual rate of 1,091,000 in November, the Commerce Department said Wednesday. That was higher than the 952,000 forecast by economists and brought the average pace of starts for the past three months to 951,000. READ MORE
Overall Housing Starts Jump 23 Percent in November
Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,091,000, according to numbers released by the U.S. Census Bureau and the Department of Housing and Urban Development. The figure is 22.7 percent above the revised October estimate of 889,000 and is 29.6 percent above the November 2012 rate of 842,000. Single-family housing starts in November were at a rate of 727,000; this is 20.8 percent above the revised October figure of 602,000. The November rate for units in buildings with five units or more was 354,000. READ MORE
MetroStudyReport - Atlanta Market
The Atlanta New Home Market Continues to Accelerate
The temporary Federal government shutdown will prevent September employment figures from being released until November 21st but as of August, Atlanta employment grew by 57,100 new positions year over year (up 2.4%) and currently ranks as the fifth best MSA in the country in terms of annual employment gains. The biggest gains were in the construction sector, up a whopping 9.2%! “It’s no surprise that construction jobs jumped by such a large percentage since new home construction starts rose significantly as well, up 71% in the third quarter compared to the same period one year ago,” said Eugene James, Regional Director for Metrostudy, a national housing intelligence and consulting firm that maintains the most extensive primary database on residential construction in the US housing market. READ MORE