Housing inventory relief may be on its way, data shows

Starts, permits both up

There might be light at the end of the housing inventory tunnel. The latest data shows both single-family starts and residential construction permits were up last month — and experts say both are a sign of good things to come.

Relief on its way?

Recent data might show construction costs are high, but that’s not stopping home builders. According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, total housing starts were up nearly a full percent in July — marking a 6.2 percent increase across all of 2018.

“Home buyers looking for more housing supply to choose from can take heart, as the Census Bureau report on housing construction showed builders are starting work on additional housing, inching closer to balancing inventory with demand,” said Mark Fleming, chief economist for First American. “Despite significant cost headwinds, home builders are pushing through new construction projects.”

Single-family starts saw particular growth in July, jumping 1.9 percent for the month and 7.2 percent over last year.

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Seeing the future

If recent permitting trends continue, starts will likely continue their upward trend in the coming months.

Residential building permits have jumped 4.2 percent since July 2017 and permits for single-family homes alone are up almost 2 percent in the last month. This is the largest monthly increase since October of last year.

“The increase in permits is a welcome sign as a strong economy with continuing job and income growth, Millennials aging into homeownership, and baby boomers living longer and more independently than ever, will continue to drive demand and keep the pressure up on the housing market,” Fleming said.

Construction jobs on the rise; will inventory do the same?

According to the National Association of Home Builders, we’ve yet to see the full effect of the recent permitting bump.

“There have been gains in the count of homes for which permits have been authorized but construction has not started,” wrote NAHB’s Robert Dietz. “For single-family homes, there are currently 97,400 permitted units that have not begun construction. This is up 25 percent from July of 2017 when the total was 77,800.”

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