The home building industry has made a quick and dramatic comeback in the wake of the COVID-induced economic downturn. Housing demand has increased so rapidly in recent months that there is now an unprecedented gap between sales and home construction.
Sales of new single-family homes in August increased 4.8% to an annual rate of 1.01 million units — their highest pace since September 2006. Moreover, Census estimates and NAHB surveys indicate builders are selling homes that have not begun construction in greater numbers. August sales of those homes are 69% higher than a year ago.
The strength of housing demand continues to be largely fueled by historically low interest rates and the growing appeal among consumers to live in lower-density markets. However, prospective buyers must content with historically low inventory of homes. Inventory of new single-family homes for sale fell to a 3.3-month supply (282,000 units) in August — 40% lower than last year, and the lowest on record dating back to 1963.
In a recent Eye on Housing post, NAHB Chief Economist Robert Dietz wrote that in addition to the large gap between new-home sales and for-sale starts, "...low levels of existing inventory, rising resale prices relative to new construction and strong builder confidence … point to solid levels of home construction in the months ahead."
Dietz also highlights several key comparisons of housing starts and sales that further illustrate housing's momentum and growth opportunities in the near future. Read the full post here.