The global housing crisis may be beginning to relieve. According to Insider, new home construction is increasing at the quickest rate since 2006. This is the second month in a row that this crucial housing measure has improved.
According to the most recent data, new residential building permits exceeded predictions and increased to an annual rate of 1.87 million. This statistic is a good predictor of how many properties will reach the market in the coming months.
This building rush shows that builders are bullish on the single-family home market.
They clearly feel they will be able to sell all of these properties because, despite the hike in loan rates, demand is still strong. But don't make your purchasers believe they have to sit around and wait for the new development to be completed. If a suitable home becomes available, they should act quickly and buy!
Buyers of homes, rejoice. Contractors are filling some of the enormous slack in the housing market.
The Commerce Department said Tuesday morning that home starts in the United States surprisingly increased in March to a seasonally adjusted annual pace of 1.79 million units. Bloomberg polled economists, who predicted that the number of new home starts will dip slightly to 1.75 million. The March rate is the highest since 2006, and it represents a second straight monthly improvement.
The increase was spurred by speedier multifamily unit building. Annual construction in the category increased to 574,000 units from 534,000 units the previous month. Single-family development dropped, although it was still the second-fastest rate since March 2021.
According to the study, building permits, which are viewed as a useful forward predictor for residential development, increased marginally to an annual rate of 1.87 million. This also exceeded expectations, which called for a drop to a 1.83 million-permit pace.
The increase is an encouraging indication for Americans who are struggling to find a house in a supply-constrained market. Early in the epidemic, home prices rose at rapid pace as high demand swiftly reduced countrywide availability to historic lows. Bidding wars for the few remaining houses drove up prices even further. The S&P Case-Shiller Home Price Index, which monitors housing prices nationally, climbed 19.2 percent in the year through January, falling just short of last year's record highs but well above the home inflation witnessed before the late-2000s market bubble burst.
S&P Dow Jones Indices (S&P DJI) today announced the most recent results for the S&P CoreLogic Case-Shiller Indices, the leading indicator of house values in the United States. Data released today for January 2022 reveal that home prices in the United States are continuing to rise.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine census divisions in the United States, recorded a 19.2 percent annual increase in January, up from 18.9 percent the previous month. The yearly gain in the 10-City Composite was 17.5 percent, up from 17.1 percent the previous month. The 20-City Composite increased by 19.1 percent year on year, up from 18.6 percent the previous month.
In January, Phoenix, Tampa, and Miami had the largest year-over-year growth among the 20 cities. Phoenix topped the way with a 32.6 percent year-over-year price rise, followed by Tampa (30.8 percent) and Miami (28.1 percent). Sixteen of the twenty cities reported larger price increases in the fiscal year ending January 2022 compared to the fiscal year ending December 2021.
The graphs on this page examine the year-over-year returns of various home price ranges (tiers) in Phoenix and Tampa.
The recent increase in home development is the latest indication that the market is on the mend. While the data is relatively volatile, and the speed of development might swiftly reverse, the surge suggests builders are scrambling to fulfill demand.
The survey released on Tuesday indicates a bright future for homebuilders, but corporations still anticipate challenges ahead. The National Association of Home Builders' index of contractor confidence fell to 77 in May, down from 79 in April, the group reported Monday, marking the fourth consecutive monthly fall. Builders blamed their bad moods on dwindling sales traffic and persisting supply-chain difficulties. According to Robert Dietz, chief economist of NAHB, the market is currently at a "inflection point," with sky-high home costs beginning to dampen demand as inventory rises.
Builders will want to act quickly before purchasing activity declines. Mortgage rates have risen by around 2 percentage points since the end of 2021, when the Federal Reserve began hiking broad interest rates in a bid to control skyrocketing inflation.
This is one of the quickest mortgage rate recoveries in history. According to Doug Duncan, chief economist at Fannie Mae, it's "just a matter of time" until rising interest rates eat into home demand and swiftly chill the market. Nonetheless, he continued, order backlogs, good earnings for homebuilders, and a lack of current supply should maintain building "resilient" in the near future.
Rising mortgage rates will almost certainly limit the construction boom later this year, as contractors seek to maintain a favorable supply-demand balance. However, March construction figures indicate that supply is resuming and that the homebuying nightmares of the previous year may not be as widespread until 2022.
Phil Schneider
