Homebuilders Pick Up Pace to Meet Shortages, Demand
Construction of new homes surged to its highest level since November, rising 15.7 percent in July to a seasonally adjusted annual pace of 1.09 million units, the Commerce Department reports. The gain followed two consecutive months of declines in the new-home sector.
"A return to production levels over 1 million confirms that consumer confidence continues to improve," says Kevin Kelly, chairman of the National Association of Home Builders. "Propelled by a healthier economy, more and more people are feeling ready to buy a home."
Groundbreaking on single-family homes, the largest part of the market, rose 8.3 percent in July, soaring to a seven-month high. Meanwhile, housing starts in the volatile multifamily market jumped 28.9 percent, the highest level since January 2006.
"July's increase in starts combined with rising builder sentiment proves that June's production dip was more of an anomaly than a reversal of the market," says NAHB Chief Economist David Crowe. "We should continue to see a gradual, consistent recovery throughout the rest of the year."
Housing starts had fallen 9.3 percent nationwide in June, led by a nearly 30 percent drop in the South.
But a strong rebound in July led all regions across the country, except the Midwest, to post gains. Housing production – combining single- and multifamily housing – rose by the largest amount in July in the Northeast, with a 44 percent uptick, followed by a 29 percent rise in the South and an 18.6 percent rise in the West. On the other hand, production dropped 24.8 percent in the Midwest, after reaching an “unusually high June level,” NAHB notes.
The rebound is expected to continue, with an 8.1 percent rise in building permitsseen, the largest since April 2013. Most of that surge in building permits was led by a 21.5 percent increase in multifamily housing permits, while single-family permits ticked up more modestly at 0.9 percent in July.