2023-06-20 17:26:35
The US housing market rebounds with an increase in new permits and home construction
In what was considered good news for those looking to buy homes in America, the number of homes that began construction in the United States rose unexpectedly last month and at the most pace since 2016, and permits to build homes increased, indicating the recovery of the housing sector and providing more support for economic growth.
According to the data issued by the Census Bureau, which was reported by Bloomberg today, Tuesday, the pace of home construction operations increased by 21.7%, to reach 1.631 million homes in May, on a monthly basis, and came more than expectations for an increase of 1.4 million homes.
The data also showed an increase in the pace of issuing home building permits, which is a future indicator of investments in the sector, by 5.2% to 1.491 million permits in May on a monthly basis, exceeding expectations that stopped at 1.423 million permits.
The ongoing shortage of homes for sale has been a major challenge for buyers, with more-than-expected rises in home prices and mortgage interest rates over the last year and a half, forcing many to increasingly turn to new construction. The recent data caused a good boost to the morale of homebuilders, and improved their expectations for the results of their business during the current year.
The data confirms the statements of Jerome Powell, Chairman of the Federal Reserve, which he made last week following announcing the bank’s decision to fix interest rates, in which he said that the housing market has shown signs of stability, especially following previous data showed that the confidence of homebuilders rose to its highest level in eleven months. With increased demand, existing inventory shortages, and improved supply chain efficiency.
Construction of single-family homes that began in May jumped 18.5% from April to a seasonally adjusted annual rate of 997,000. Permits to build single-family homes rose to a seasonally adjusted annual level of 897 thousand units, up 4.8% from April’s seasonally adjusted level of 856 thousand units.
New projects have become an essential part of today’s housing market. The National Association of Home Builders estimates that more than a third of homes on the market this spring will be new construction, historically around 13%.
According to Bloomberg, housing construction data supports economists’ expectations for the future of the economy, as home construction affects the country’s gross domestic product. Home construction last contributed to economic growth during the first quarter of 2021.
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