One thing is clear: the housing market desperately needs more houses on the market right now. Luckily, it looks like help is on the way in the form of newly built homes.
According to a new report from the Census Bureau and Department of Housing and Urban Development, new single-family home construction rose by 15.3% in March compared to February.
In fact, according to analysis of the data from the National Association of Home Builders, March saw the fastest pace of housing starts in any month since June 2006.
March’s increase makes up for February’s subdued figures, which saw housing starts fall by more than 10% compared to January.
As a result, single-family housing starts were up 19.6% in the first quarter of 2021 compared to the first quarter of last year.
Shifting back to March’s data, both building permits and housing completions were both up over February as well.
According to the Census and HUD data, single-family housing completions in March were 5.3% above February. Meanwhile, building permits for single-family home construction rose 4.6% in March compared to February.
The potential wave of new homes coming on the market comes at a time when demand for new homes is still strong but the supply is unable to keep up. The lack of new homes on the market is already impacting sales.
But there may be a light at the end of the tunnel, as long as rising construction costs don’t get in the way.
“Demand remains solid due to low mortgage interest rates and a thin level of inventory in the resale market, which is spurring the need for additional supply,” NAHB Chief Economist Robert Dietz said. “The test for the industry this year will be balancing growth and higher construction costs, given ongoing housing affordability challenges.”