Considering that the number of homes on the market hit an all-time low in December, an influx of homes for sale is sorely needed. Luckily, it appears that help is on the way.
According to new data from the Census Bureau and Department of Housing and Urban Development, new home construction increased in December, hitting a pace not seen since late 2006.
Per the government data, housing starts (defined as construction beginning on a new home) increased 5.8% in December over November’s total. But a closer look at the data shows that housing starts at December hit the highest point in 14 years.
According to National Association of Home Builders Chief Economist Robert Dietz, the pace of single-family homes being built in December was the highest since September 2006.
Housing starts are measured on an annual rate. The December reading of 1.34 million single-family housing starts is the number of houses that would be built if construction continued at December’s pace for the next 12 months.
Bottom line is that construction of new homes accelerated in December at a time when housing needs more inventory on the market.
Overall, the number of single-family housing starts rose 11.7% in 2020 compared to 2019, a trend Dietz believes will continue in 2021.
“While NAHB is forecasting further production increases in 2021, the gains will be tempered by ongoing supply-side challenges related to material costs and delivery times, a dearth of buildable lots and regional labor shortages that continue to exacerbate affordability woes,” Dietz said.
And with demand for new homes remaining elevated, those new homes can’t come on the market soon enough.