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CHART OF THE DAY: Housing activity continues to surge

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Home builders remain active as the housing market closed out last year in a strong fashion. Housing starts rose by 5.8% to an annualized rate of 1.67 million in December, ending the year as one of the strongest in a decade, the Commerce Department reported on Thursday. And housing permits, an indicator of future activity, increased as well, by 4.5% to an annualized rate of 1.7 million in December.

Home builder confidence remains elevated…

But even as activity remained strong, there are signs that confidence is waning a bit. The National Association of Home Builders’ Confidence Index came in at 83 in January, still high but down from the all-time high of 90 in November.

… as the housing market booms

Amid the surging market, home builders have raised concerns about the availability of land, rising lumber prices and the lack of skilled labor. But it is buyer traffic, which could decline as lockdowns intensify across the country, that we will be tracking more closely.

Still, there is no denying the overall strength of the market. Continued low interest rates and a shift to the suburbs, combined with the economic boost related to the COVID-19 vaccines, will lead to a housing market this year that is even hotter than last.

For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

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About Troy Merkel

@troymerkel

Troy Merkel is a Partner and Real Estate Senior Analyst at RSM. He has 15 years of experience in audit and consulting, with a particular emphasis in real estate and financial services reporting, in accordance with US GAAP, IFRS, NCREIF PREA Reporting Standards and income tax basis. He is also an expert in accounting for asset acquisitions and complex leases and specializes in various tax-advantageous, in particular Opportunity Zones and government subsidized deal structures.

In 2018, Troy was selected as a senior analyst in RSM’s cutting edge Industry Eminence Program, which positions its senior analysts to understand, forecast and communicate economic, business and technology trends shaping the industries RSM serves. These senior analysts advise clients on conditions impacting middle market leaders. Troy’s focus is on the real estate industry.

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