Housing Market Turning

In recent months, the housing market has seen a surge in new home construction as builders work to meet the growing demand for housing. According to the latest data from the U.S. Census Bureau, residential new construction rose 14.8% in November 2023 compared to the previous month, reaching an annual rate of 1.56 million new homes being built. This increase in new home construction is a positive sign for the housing market, as it indicates that builders are feeling optimistic about the future of the industry.

One of the driving factors behind the increase in new home construction is the decline in mortgage rates. As rates have come down, more people are able to afford to buy a home, which has led to an increase in demand for new homes. This, in turn, has spurred builders to ramp up construction in order to meet the growing demand.

In addition to the decline in mortgage rates, the increase in new home construction can also be attributed to the rise in housing permits. In November 2023, the number of housing permits issued rose 6.6% month-over-month to 1,453,000 completions. This increase in permits is yet another good sign for the housing market.

Despite the increase in new home construction, the housing market still faces some challenges. One of the biggest challenges is the high cost of building materials. The cost of lumber, for example, has risen significantly in recent months, which has made it more expensive for builders to construct new homes. In addition, the ongoing labor shortage in the construction industry has made it difficult for builders to find the workers they need to complete projects on time.

Despite these challenges, as more homes are built, it will help to ease the shortage of available homes for sale and provide more options for buyers. This, in turn, could help to keep home prices from rising too quickly and make it easier for people to find a home that they can afford.

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