Housing Starts Heat Up
Housing Starts were also on the rise in July, up 22.6% from June and coming in 23.4% higher when compared to last July. Though the gain was mostly in Multifamily Starts, Single-Family Starts were up a solid 8.2%.
Building Permits, a sign of future construction, were up 18.8% from June to July and up 9.4% when compared to July of last year. Almost the entire gain was comprised of permits for single-family homes, which rose 17% from June to July.
Even with the increase in Housing Starts and Building Permits, supply remains extremely tight. And since builders were not putting up homes due to the pandemic, it may be challenging for them to keep up with the demand.
According to Freddie Mac, the housing market would need to add 1.6 million single-family housing units per year to keep up with the demand. Add to this the price increase in building materials like lumber as mentioned above, it’s likely we are going to continue to see a big imbalance between supply and demand – and this will be supportive of home prices.
Existing Home Sales
Closings on existing homes, were up 25% in July per the National Association of REALTORS. Because these are closings, they likely represent buyers shopping for homes in May and June. This was the largest one month jump ever and comes off the heels of June’s strong report that showed sales were up 20%. First-time homebuyers made up 35% of home sales, up from 34% in June.
Inventory remained tight, as there were only 1.5 million units for sale in July, which is down 21% compared to July of 2019. But even with this low level of inventory, salesare still up 9% year over year.
The median home price was reported at $304,100, up 8.5% versus the same time last year. Remember, this is not appreciation. Half the homes sold above and half below this number.
NAR’s chief economist, Lawrence Yun, noted, “The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days. With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
Information provided by MBS Highway weekly newsletter MBS Road Signs