Homebuilders broke ground on new homes at the fastest pace in about eight years, according to statistics released by the Commerce Department Tuesday.
“A fresh supply of new homes will therefore reach the market in upcoming months to help relieve the inventory tightness,” says Lawrence Yun, the chief economist for the National Association of REALTORS®. “There is no need to worry about an oversupply. Even more production would be welcomed.”
NAR’s perspective on the latest housing starts
An increase in single-family housing starts led the strong rebound in housing production in July, climbing 12.8 percent month over month to a seasonally adjusted annual rate of 782,000 units. The volatile multifamily market, on the other hand, dropped 17 percent last month to 424,000 units.
“Our builders are reporting more confidence in the market, and are stepping up production of single-family homes as a result,” says NAHB Chairman Tom Woods. “However, builders are still reporting problems accessing land and labor.”
“This month’s drop in the more volatile multifamily side is a return to trend after an unusually high June,” says NAHB Chief Economist David Crowe. “While multifamily production has fully recovered from the downturn, single-family starts are improving at a slow and sometimes intermittent rate as consumer confidence gradually rebounds. Continued job and economic growth will keep single-family housing moving forward.”
Homebuilder confidence:Builders Feel Like It’s the Housing Boom Days
Regionally, new-home starts – reflecting both single-family and multifamily starts — jumped by the highest percentages in the Midwest, which saw a 20.1 percent increase in starts in July. The South also posted a 7.7 percent gain in starts. On the other hand, the Northeast posted a 27.5 percent decrease in housing starts in July, followed by a 3.1 percent loss in the West.
Housing permits – a sign of future production – posted a 16.3 percent decrease in July. Single-family permits dropped 1.9 percent to a rate of 679,000 while multifamily permits fell 31.8 percent to 440,000.