Construction of New U.S. Homes Going Strong
Americans who are looking to buy a house can breathe a collective sigh of relief as the construction of new residential homes continues churning along. In March, builders secured 1.26 million permits for new housing projects, according to the U.S. Census Bureau and U.S Department of Housing and Urban Development.
That figure is significant because it represents a 17 percent spike in the number of permits approved in March of 2016. This substantial increase in year-over-year permits is a strong indicator that an increase in construction will soon follow.
Confidence is high for these types of homes
The builder index is a rating of confidence assigned by The National Association of Home Realtors and Wells Fargo for new, single-family homes and it’s currently very strong.
In March, the builder index reached 71, the highest rating received since 2005. Confidence dipped to a rating of 68 in April, but jumped to 70 in May, despite projections that it would remain flat.
This should be music to the ears of anyone looking to start a family who wants to have their own backyard. However, new homes can be expensive – the median cost of a newly-built home in February was $296,200, approximately 30 percent higher than the median cost of an existing home.
There’s also good news for condo buyers and renters
The availability of multi-unit buildings with condominiums or apartments is expected to increase by late summer or fall. This stems from a 26.1 percent year-over-increase in February for the number of permits for buildings with five or more units.
This spike in construction of multi-unit dwellings is approaching the number of projects that were underway in recent months.
New construction numbers vary by region
The Southern United States saw the biggest increase in new home construction with 611,000 completed projects in March, representing a 10.5 percent year-over-year bump. Meanwhile, Western states gained 290,000 new homes while Midwestern states added 191,000 new houses.
The Northeast had the lowest number of new homes built, which can be partially attributed to a lack of developable land in the area.
Expect more housing options for everyone
Whether you’re in the market to own or rent a home, consumers will see some relief from the limited supply of options they’ve been experiencing. This influx of construction is especially promising for prospective homeowners looking to close a deal before another Federal Reserve key interest rate hike.