Increased Rate of New Home Construction
August 8, 2017 | Elite Realty
The rate of new home construction increased in June to the fastest pace in four consecutive months prior. Though increases were seen across the nation, the rise was led by substantial increases in the Northeast and Midwest.
New home construction increased by 8.3 percent in June to a seasonally adjusted annual rate of 1.22 million, according to the Commerce Department. The increase marked the end of three straight monthly declines and marked the strongest pace of building since February. Home construction has risen 3.9 percent year-to-date, but that increase has not been able to make up for the decrease in existing homes being listed for sale.
The June housing figures point to healthy demand that new construction alone has not yet been able to satisfy. In a number of metro areas across the nation, fewer existing homes are being listed for sale, while purchase prices for newly built homes have surged at a pace over six times the pace of wage growth. As a result, more Americans are moving quickly to purchase homes but having a challenging time doing so because of a lack of supplies and higher costs.
So far during 2017, builders have turned their attention toward single-family houses and away from rental apartments. New construction of single-family houses has risen 7.9 percent, while construction of multi-family buildings has decreased by 4.2 percent.
New home construction increased dramatically by 83.7 percent in the Northeast and 22 percent in the Midwest, representing a pace of growth that is not likely to be sustained. Building permits, an indicator of future construction, showed an increase of 7.4 percent to 1.25 million.
Home construction firms are confident that demand will continue, but they have also begun to temper their expectations to a more modest level.
The median price of a new home sold in May increased by 16.8 percent from a year ago to a record $345,800. Prices have been increasing as demand has outstripped supply of new homes, in part because of a shortage of available building lots.