New numbers released by the U.S. Census Bureau and the Department of Housing and Urban Development show the number of authorized permits to build single-family homes rose 3.7 percent in August. That encouraging news was the bright spot in an otherwise lackluster August residential construction report. However, because permits are generally a good indicator of future activity, the rise in single-family authorizations could be a good sign for future new home construction. And, because new home construction helps balance the market, that could be good news for home buyers in the months ahead. Still, August’s numbers were lower than expected. In fact, overall housing starts – which refer to the number of homes that broke ground – fell 5.8 percent, largely due to a significant drop in construction in the South. The Northeast, West, and Midwest, on the other hand, all saw gains. New home construction is particularly important right now because many markets are suffering from a lower-than-usual number of homes for sale. Without a significant boost, low inventory will continue to push prices higher while limiting the number of homes prospective buyers have to choose from. Fortunately, buyer demand has remained high so far this year, mostly because low mortgage rates and rising incomes have helped offset the upward pressure on prices caused by limited inventory. More here.
