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Housing to start 2020 with a bang

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When Boeing announced on Monday that it would halt production of its troubled 737 Max in January, it raised the prospect that the economy could take a hit in early 2020. But Tuesday’s announcement of stronger-than-expected housing starts could ease some of those concerns.

The Commerce Department reported that November housing starts rose by 3.2% in November to a seasonally adjusted rate of 1.365 million, exceeding expectations.

And the news kept on rolling with housing permits, a leading indicator of future starts, rising to 1.482 million – the highest in 12½ years, the Commerce Department reported.  The gains edged the market closer the 1.5 million necessary to stabilize the market. Multifamily continued to lead growth with a 2.5% increase in permits.

There was an early indication that the numbers would be strong when the National Association of Home Builders Housing Market Index jumped from 71 to 76 just days before.

After spending the bulk of 2019 clearing out old inventory, home builders have refocused their strategy to build more affordable housing in the future. This is welcome news to first-time home buyers, who still continue to struggle finding entry-level housing.

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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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