Housing News

Good News Homebuyers. More Newly Constructed Homes to Soon Hit the Market

For years, many people trying to buy a home have been stymied by a lack of homes on the market. However, more newly built homes are expected to go up for sale soon.

The number of homes under construction rose 5.2% from June to July, according to a recent report from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

The number of housing starts jumped 12.9% year-over-year in July. (Housing starts are homes that builders have begun construction on but haven’t yet completed.)

Construction on multifamily homes, which are buildings with five or more units, surged 27.4% year-over-year. These are typically apartment and condominium buildings.

Meanwhile, housing starts for single-family homes, the popular standalone houses that often have backyards, were up 7.8% year-over-year in July.

New home construction was brisk in the Midwest and the South, where housing starts jumped 40.8% and 29.5% year-over-year respectively.

However, building activity declined sharply in the Northeast, down 35.5% year-over-year, and in the West, down 14.4%.

“The monthly increase in housing starts and permits is a welcome development, but one data point doesn’t make a trend,” said First American Deputy Chief Economist Odeta Kushi in a statement. “The housing market remains structurally undersupplied, and we need more hammers at work to build the homes that are still in short supply.”

The housing market still needs more homes

Despite builders beginning construction on more homes, there still aren’t enough in the pipeline to address the housing shortage, say real estate experts.

The number of new homes completed in July was up 6% from June, but fell 13.5% from July of last year, according to the government report. Finished single-family homes were down 6.1% year-over-year.

“Single-family production continues to operate at reduced levels due to ongoing housing affordability challenges, including persistently high mortgage rates, the skilled labor shortage and excessive regulatory costs,” said National Association of Home Builders (NAHB) Chairman Buddy Hughes. He is also a home builder and developer from Lexington, N.C.

There are roughly 621,000 single-family homes under construction, according to NAHB.

“This is the lowest level since early 2021 as builders pull back on supply,” said NAHB Chief Economist Robert Dietz.