As we noted in a previous Construction Industry Update in Spring 2021, the housing market – including both new build construction and existing home sales – continues to be an economic driver during these not-so-normal times.
According to MarketWatch, the National Association of Home Builders is seeing a rebound in the confidence index of its member home builders, following a three-month decline. Even despite ongoing challenges in the supply chain and labor force, the home construction industry is showing signs of stability. “The single-family building market has moved off the unsustainably hot pace of construction of last fall and has reached a still hot but more stable level of activity,” Robert Dietz, chief economist for the NAHB.
This increased optimism is likely at least in part due to the fact that August housing starts were better than expected, according to HousingWire. In fact, U.S. homebuilders started construction on 1.615 million homes in August, up 3.9% from July 2021 and 17.4% higher than a year ago. The increase appears to be the result of a combination of factors, including near record-low rates, limited supply of existing housing, and demand driven by millennials entering homeownership.
While home builders picked up the pace of new-home construction and permitting in August, much of the building is focused on on multifamily housing. Also trending in new construction is a focus on building homes in the “exurbs” or the more rural areas beyond the suburbs. Not to be left out, however, the inner suburbs are also seeing significant building activity, with townhome construction the highest it has been in 14 years.
Chief Economist Danielle Hale of Realtor.com notes that while this time of year is typically the best time to buy in most major markets, the market is still seeing homes selling quickly and prices continue to grow at a faster pace. But low mortgage rates continue to keep affordability in check for those seeking to buy a new home.
What does all this mean as we look to 2022? The Home Buying Institute reports a recent increase in the number of new listings hitting the real estate market. If inventory growth continues over the coming months, it could shift the housing market later in 2022. While this may not result in a classic buyer’s market anytime soon, sustained inventory growth could make the real estate scene a bit more buyer-friendly in 2022.
Whether buying a home, facilitating a transaction for your client, or embarking on a new commercial or residential construction project, McSteen can help. From site plans and topographic surveys to mortgage location surveys and most recently, construction draw inspections and utility locations, we’re here for you and your clients, every step of the way.
