Real Estate

New Home Construction Surges As Suburbs Gain In Popularity

new home construction

Home construction surged in July as real estate emerges as a bright spot in a U.S. economy struggling to rebound in the wake of the coronavirus pandemic.

New home, condo and apartment starts surged 23.4 percent in July to an annualized rate of 1.5 million compared to the same month a year ago, while also rising 22.6 percent over this June as well, for the biggest gains in four years, a new federal report on the housing market shows.

Building permits, which point to future construction activity, posted a 9.4 percent year-over-year increase in July, also rising to annualized rate of 1.5 million. Building permits were also up dramatically compared to this June, increasing more than 18 percent, according to a joint announcement by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Both housing starts and building permits are almost back to levels of activity reached in the months before COVID-19 hit the U.S. in full force in March, upending life and economic activity.

Starts of single-family homes rose 7.4 percent year over year to an annualized rate of 940,000, a bit below February’s rate of 1 million.

The increases came in well above the estimate of analysts, with builders pushing ahead with residential construction plans in a real estate market that has barreled ahead even as the pandemic and the downturn it has triggered claims millions of jobs.

While home sales have lagged, prices have set new records, with the Federal Reserve’s decision to lower interest rates making larger mortgages more affordable for buyers, industry observers say.

The outlook for the home building sector has also significantly improved since June, when new home starts and permitting were starting to rebound, but were still below we the level of activity for the same period in 2019.

Health concerns are driving a growing number of buyers to leave the city for larger homes in the suburbs, according to Taylor Morrison CEO Sheryl Palmer.

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