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19 July 2017
 |
Home Construction (The Total Investment & Insurance
Solutions)
Homebuilders ramped up construction in June to the fastest pace in four
months, led by surges in the Northeast and Midwest. The Total Investment & Insurance Solutions
Housing starts climbed 8.3 percent in June to
a seasonally adjusted annual rate of 1.22 million, the Commerce Department said
Wednesday. The gain ended three straight monthly declines and marked the
strongest pace of building since February. Home construction has risen 3.9
percent year-to-date, but that slight increase has been unable to make up for
the decrease in existing homes being listed for sale.
The June housing figures point to healthy
demand that new construction alone has been unable to satisfy. Fewer existing
homes are being listed for sale, while purchase prices for newly built homes
have surged at pace more than six times wage growth. As a result, more
Americans are rushing to purchase homes but are struggling to do so because of
a lack of supplies and higher costs.
Builders also face higher costs for land and
materials, putting a limit on just how much construction can occur. The Total Investment & Insurance
Solutions
"Steady gains in construction are
expected over the next year, supported by still-strong fundamental demand for
housing," said Jennifer Lee, a senior economist at BMO Capital Markets.
"But acting as a bit of a roadblock are problems that the builders face:
rising lumber costs, and shortages of labor and lots to build on, which will
boost pricing." The Total
Investment & Insurance Solutions
So far this year, builders have turned their
attention toward single-family houses and away from rental apartments. Starts
of single-family houses have risen 7.9 percent, while construction of
multi-family buildings has slipped 4.2 percent.
Housing starts jumped a stunning 83.7 percent
in the Northeast and 22 percent in the Midwest, growth that is unlikely to be
sustained. The government's home construction report can be volatile on a
monthly basis. Sales edged up in the West but declined in the South.
Building permits, an indicator of future
construction, were up 7.4 percent to 1.25 million.
Construction firms are confident that demand
will continue, but they have also begun to temper their expectations. The Total Investment & Insurance
Solutions
The National Association of Home
Builders/Wells Fargo builder sentiment index fell to 64 in July, the lowest
level since November. Readings above 50 indicate more builders view sales
conditions as good rather than poor. The
Total Investment & Insurance Solutions
The median price of a new home sold in May
rose 16.8 percent from a year ago to a record $345,800. Prices have been
increasing as demand has outstripped supply of new homes, in part because of a
shortage of available building lots.The
Total Investment & Insurance Solutions
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