Due to a building boom in the South, construction activity on new single-family houses unexpectedly increased in July.
The Department of home and Urban Development and the U.S. Census Bureau said Tuesday that the seasonally adjusted annual rate of single-family home starts increased 2.8% from June to 939,000 last month. The July number was 7.8% higher than the same month last year.
The South, where single-family starts increased 13% on a monthly basis and 22% annually, was the only region driving the gain. In the Midwest, Northeast, and West, single-family starts decreased both monthly and annually.
Single-family home permits, which are an indicator of upcoming building, increased by 0.5% month over month but decreased by 7.9% annually.
Even with the slight increase last month, the pipeline for single-family house building is still moving slowly. There are currently 621,000 homes under construction, which is 1% less than in July and 3.7% less than a year ago.
Taking everything into account, the new construction statistics from this month does not offer many distinct indications as to when
According to recent poll data, homebuilders are still not optimistic about the housing market, and the usage of sales incentives has increased to its highest level in five years.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which was issued on Monday, shows that 66% of builders reported employing sales incentives such discounts or mortgage rate buydowns in August, up from 62% in July.
According to the poll, 37% of builders reported lowering prices in August, which is not much different from 38% in July. Since November, the average price drop has been constant at 5% this month.
In August, builder confidence in the newly constructed single-family home market was 32, one point lower than in July. Anything under 50 indicates that homebuilders are not optimistic about the market.
Due to persisting home affordability issues, such as consistently high mortgage rates, a lack of trained labor, and exorbitant regulatory expenses, single-family production is still operating at lower levels, according to NAHB Chairman Buddy Hughes. Our most recent builder poll, which shows that affordability is the biggest obstacle facing the housing industry, echoed these difficulties.
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