Skyrocketing home prices have plagued the real estate market for over a year with the only solution being an increase in housing starts and completions to bring prices back down.
Residential construction has been on the uptick, but is it enough to make a difference for buyers?
According to the U.S. Department of Housing and Urban Development, June privately-owned housing permits were at a seasonally adjusted rate of 1,254,000 — a 7.4 percent month-over-month increase from May, and a 5.1 percent year-over-year increase from the June 2016 estimate of 1,193,000.
Single-family housing permits were at a rate of 811,000, a 4.1 percent month-over-month increase from May’s revised rate of 779,000.
Construction starts were solid in June as well — privately-owned housing starts experienced a 8.3 percent month-over-month and 2.1 percent year-over-year increase to a seasonally adjusted rate of 1,215,000.
Single-family housing starts grew to a rate of 849,000, a 6.3 percent month-over-month increase from May’s 799,000.
Lastly, privately-owned housing completions rose 5.2 percent month-over-month and 8.1 percent year-over-year to a rate of 1,203,000. Single-family completions were at a rate of 798,000 — 0.4 percent above May’s rate of 795,000.
National Association of Realtors Chief Economist Lawrence Yun says the report is “welcome news,” but more building is needed to meet the historical average and alleviate affordability issues due to low inventory.
“Though a recovery in housing starts in June is welcome news, more consistent gains are needed to help rebalance the housing market,” Yun said in a blog post. “The latest 1.22 million in total housing starts is still well below the historical average of 1.5 million.”
“That is why the country is experiencing a stubborn housing shortage,” he added. “With rising population and steady job gains, drastically more new home construction is needed to fully and satisfactorily house new households that will be formed this year and upcoming years.”
The metrics in the New Residential Construction report measure new, privately owned housing units, excluding manufactured (mobile) homes. The U.S. Census Bureau and HUD collect the data from the Building Permits Survey and from the Survey of Construction, which is partially funded by HUD.
The Building Permits Survey produces estimates of the number of permits issued for new housing units based on a mail survey of a sample of permit offices. The Survey of Construction produces monthly estimates of housing starts and completions; Census Bureau field representatives sample individual permits within a sample of permit offices and then interview the builders or owners who took out the sampled permits to obtain start and completion dates, as well as sale dates and characteristics, such as size and number of bedrooms.
Field representatives also drive roads looking for new residential construction activity in land areas where building permits are not required.