The US housing market has rebounded with an increase in new permits and home construction, providing positive news for those looking to buy homes in America. According to data from the Census Bureau reported by Bloomberg, the pace of home construction operations increased by 21.7% in May, reaching 1.631 million homes on a monthly basis. This exceeded expectations for an increase of 1.4 million homes. Additionally, the data showed a 5.2% increase in the pace of issuing home building permits in May, reaching 1.491 million permits on a monthly basis, surpassing expectations of 1.423 million permits.
The ongoing shortage of homes for sale has been a major challenge for buyers, with rising home prices and mortgage interest rates over the past year and a half. This has led many buyers to turn to new construction as an alternative. The recent increase in home construction and permits has boosted the morale of homebuilders and improved their expectations for business results this year.
The data aligns with the statements made by Jerome Powell, Chairman of the Federal Reserve, who noted signs of stability in the housing market. Previous data showed an increase in homebuilder confidence to its highest level in eleven months, driven by increased demand, existing inventory shortages, and improved supply chain efficiency.
In May, construction of single-family homes jumped 18.5% from April to a seasonally adjusted annual rate of 997,000. Permits to build single-family homes also rose to a seasonally adjusted annual level of 897,000 units, up 4.8% from April’s level of 856,000 units.
New construction projects have become an essential part of the current housing market, with the National Association of Home Builders estimating that more than a third of homes on the market this spring will be new construction, historically around 13%.
The housing construction data supports economists’ expectations for the future of the economy, as home construction plays a significant role in the country’s gross domestic product. Home construction last contributed to economic growth during the first quarter of 2021.
Overall, the increase in new permits and home construction indicates the recovery of the housing sector and provides more support for economic growth in the United States.
real estate market outlook 2023
Title: Positive Signs of Recovery in the US Housing Market: Increase in Permits and Home Construction
The US housing market has experienced a significant rebound, bringing positive news for those interested in purchasing homes in America. According to recent data from the Census Bureau, reported by Bloomberg, there has been a notable increase in the pace of home construction operations. In May alone, the number of homes constructed on a monthly basis reached 1.631 million, surpassing expectations for an increase of 1.4 million homes. This represents a remarkable 21.7% surge, highlighting the robustness of the housing market.
Additionally, the data reveals a 5.2% uptick in the pace of issuing home building permits in May. A total of 1.491 million permits were issued on a monthly basis, exceeding expectations of 1.423 million permits. This rise in building permits further signifies the resiliency of the housing market and reinforces positive sentiment for the industry.
One of the key factors driving this surge in new construction is the enduring shortage of homes available for sale. Over the past year and a half, potential buyers have faced challenges such as rising home prices and mortgage interest rates. As a result, many individuals have turned their attention to new construction as a viable alternative. The recent increase in home construction and permits has effectively addressed the shortage issue, providing more opportunities for buyers in the market.
These promising trends align with statements made by Jerome Powell, Chairman of the Federal Reserve, who noted signs of stability in the housing market. The Federal Reserve’s observations are supported by previous data indicating an increase in homebuilder confidence to its highest level in eleven months. This surge in confidence can be attributed to factors such as heightened demand, existing inventory shortages, and improved supply chain efficiency.
Breaking down the data further, the construction of single-family homes experienced a significant jump of 18.5% from April to May. This increase led to a seasonally adjusted annual rate of 997,000 single-family homes being constructed. Concurrently, permits to build single-family homes rose to a seasonally adjusted annual level of 897,000 units, indicating a 4.8% rise from April’s level of 856,000 units.
Notably, new construction projects have become an integral part of the current housing market landscape. The National Association of Home Builders estimates that more than a third of homes available on the market this spring will be new construction, a historic high compared to the usual average of 13%.
The positive trajectory of the housing construction sector is not only beneficial for potential homeowners but also vital for economic growth. Economists expect home construction to play a significant role in the country’s gross domestic product, further supporting the positive outlook for the future of the economy. Importantly, the growth in home construction already contributed to economic expansion in the first quarter of 2021.
It is clear that the increase in new permits and home construction signifies a robust recovery in the US housing market. Not only does this revitalization instill confidence in homebuilders, but it also provides a strong foundation for sustained economic growth in the United States.
