The U.S. housing market continues to grow
The year 2017 marked the eighth consecutive year of growth in the U.S. economy (GDP increased 2.3%) with positive effects on the construction and housing markets. The value of U.S. construction spending (includes both private and public residential and non-residential construction) registered the sixth consecutive annual increase (+3.8% from the previous year), reaching a record high of $1.23 trillion.
In the housing market new home starts also increased for the eighth year in a row, achieving their highest yearly level in a decade. There were 1.20 million total housing units started in 2017, up 2.4% from the previous year. Despite the steady year-over-year growth since 2010, new home starts remain down by one third from 2006, the last full year prior to the start of the Great Recession. The growth in housing was driven by single-family new home starts (up 8.5% vs. 2016), which comprised 70.6% (848,300 units) of total home starts last year. Multi-family starts (353,800 units), however, fell 9.8% from 2016.
Looking ahead low housing inventory, coupled with rising home prices and pent up demand, should provide a boost to housing starts in the coming year.
New single family home sales were at a 10-year high of 608,000 units, up 8.3% compared to 2016. Despite this positive news and six consecutive years of growth, new home sales have been slow to recover from the damage wrought by the recession. For perspective new home sales are less than half of what they were in 2005, when a record 1.28 million new units were sold.
Existing home sales rose for the third year in a row and were at 4.89 million units for the year, up 1.1% vs. 2016; this was their highest level since 2006 (source National Association of Realtors).
Foreclosure filings, one of the main inverse indicators of the U.S. housing market’s health, have fallen dramatically from an all-time high of 2.87 million units in 2010 to 677,000 in 2017. This is very good news for the U.S. economy, as foreclosures reduce home values and make it more difficult for homebuyers to obtain loans, creating a drag on home starts and existing and new home sales.
The 30-year fixed mortgage rate for 2017 was 3.99%, and while up from 3.65% last year (which was the lowest annual rate on record), this was still a very low rate historically.
The positive development in the construction and housing markets helped the U.S. ceramic tile market increase for the eighth year in a row, reaching a volume of 283 million m2, up 5.1% from 2016.