Over the last few months, the real estate market has seen a shortage of supply and an increase in demand. So many more people entered the market looking to buy homes that sellers and builders could not keep up. Last year, sales of new homes went up 14.5 percent to 501,000. These sales are the strongest they have been since the 2007 market crash. However, now the shortage of real estate is a problem that is in the process of being solved. The home construction increases in February rose to its highest level in five months according to the Associated Press. However, it is hard to tell if the problem is going away because applications for new construction were still low for the third month in a row.
On Wednesday, the Commerce Department released some stats. They said that housing starts rose 5.2 percent in February. This brought them to a seasonally adjusted rate of 1.17 million units. These starts had dropped in December and then remained flat in January. This increase in housing starts in February is a good sign. However, building permits are dropping.
Bricklin Dwyer, an economist with BNP Paribas thinks that this is just a temporary slump because there are solid fundamentals backing up home construction.
“We see a resilient labor market as supportive of a continued slow and steady housing recovery and low housing inventory should continue to bolster residential construction ahead,” Dwyer said.
Home Construction Increases and other Statistics from February
Construction of single-family homes rose 7.2 percent in February. The smaller apartment sector increased only slightly, about 0.8 percent. While home construction is increasing, it’s also a good sign that builder sentiment is staying positive as well. The National Association of Homebuilders/Wells Fargo builder sentiment index held steady throughout March at 58. Any score above 50 means builders view conditions as good, not poor.
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