Despite the increase in mortgages, the annualized rate of permits for construction in the future increased by 5.2% in May after decreasing in March and April
Due to low inventory in the existing housing market, home construction projects jumped in May, climbing 21.7% compared to April, marking the most significant increase since 2016, according to the US Census Bureau.
Housing starts, a measure of new home construction, far exceeded predictions that they would decline by 0.1%. The single-family units also showed strong growth surpassing expectations and reaching 1.63 million, representing an increase of 18.5%.
The numbers echo the reality of the country that is in need of more homes. The US is short of 3.8 million houses, a report by Freddie Mac says.
The numbers also align with Federal Reserve Chair Jerome Powell’s recent remarks about the housing market stabilizing.
Builders are rushing to meet the demand of millennial home buyers
Homebuilders, responding to limited inventory in the resale market, have grown more optimistic as demand strengthens and material costs decline.
Despite the increase in mortgages, the annualized rate of permits for construction in the future increased by 5.2% in May after decreasing in March and April.
Data on existing home sales for May will be released soon, along with a report on new home purchases next week.
The National Association of Home Builders, Wells Fargo Housing Market Index rose for the Sixth consecutive month, surpassing 50 for the first time since July 2022.