A shortage of homes for sale combined with growing buyer demands will likely spark home builders to construct the most homes this year than in the last decade, economists told HousingWire.
“Most likely a result of the trending imbalance between homes for sale and demand for new homes to purchase, housing starts finally edged up in the month of June to 8.3 percent,” says Greg Parsons, Semper Capital Management CEO. “The need to balance the growing demand for housing with a dwindling supply, coupled with a strong economy, has given builders an opportunity to break ground and build more homes.”
The Midwest and Northeast will likely see the most uptick in new-home construction.
“Single-family homes continue to show steady growth, which is an encouraging sign as we move through the warm summer months, especially in areas like the Midwest and Northeast,” says Bill Banfield, Quicken Loans executive vice president of capital markets. “More importantly, starts and permits are up year over year, showing promising opportunity for the housing market.”
Housing starts will likely fluctuate and some months could still see a drop, says Nationwide chief economist David Berson, who also served as a former chief economist for Fannie Mae. But he believes any drop will just be a temporary blip. He predicts that housing starts for all of 2017 to be around 1.25 million units, which would be the highest level since 2007.
The increase in new housing would be a much needed relief to the overall housing market, adds Lawrence Yun, the National Association of REALTORS®’ chief economist.
“More consistent gains are needed to help rebalance the housing market,” Yun told HousingWire. “The latest 1.22 million in total housing starts is still well below the historical average of 1.5 million. That is why the country is experiencing a stubborn housing shortage. With rising population and steady job gains, drastically more new home construction is needed to fully and satisfactorily house new households that will be formed this year and upcoming years.”
The Commerce Department is to release its new-home sales report on Wednesday, which will reflect the latest June numbers.
Source: “This Year Will Probably be the Biggest Year for Homebuilders in a Decade,” HousingWire (July 19, 2017)
