This past June, privately owned housing starts were up 9.8% from May, according to a statement by the Commerce Department. Following yesterday’s post about increases in builder confidence and their optimism for the market, it is clear that the housing supply issue in the US is beginning to be solved.
According to the chief economist at realtor.com, Jonathan Smoke, “An increasing level of new construction is the primary way that the housing market will find balance in this surging demand but tight supply environment.”
However, Smoke advises not to put too much faith into this one report’s numbers.
“The measures are based on a survey of local jurisdictions and have been prone to wide fluctuations month to month since the downturn began,” Smoke says. “As a result, it’s often important to compare the monthly change to the relative standard errors reported with the data. In many cases the monthly changes do not prove to be statistically significant, and that’s again the case with the June starts data in this report.”
Smoke also noted that surprisingly, construction of multifamily homes is growing more quickly than that of single-family homes.
Overall, Smoke and realtor.com are optimistic that more housing is on its way and the building industry is catching up to a booming real estate market.
The past few months have shown that after a lag in the real estate market during the recession and for the past years since, the market is now on an upswing with regards to sales. However, with such a great demand in real estate meant supply quickly dwindled. This shortage has caused prices to rise quickly, so it is healthy and positive for consumers that builders are now increasing supply and will continue to do so.
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