As Covid-19 caused cities and businesses to shut down operations, new home constructions were also put to a pause in the previous months.
Fortunately, those days are almost over as the Census Bureau has released data last June 17th showing that the housing starts have increased by 4.3% in May, with 934,000 new starts recorded for the month. Building permits also rose to 14.4% over April. Single-family permits also jumped by 11.9%.
This bodes well for the supply-strapped housing market but this is not a quick relief. It usually takes about 8 months for a permit to become a housing completion or a finished property ready for sale. This means that buyers won’t see the outcome from the production in May until early next year.
Fannie Mae’s chief economist says the Census Bureau report was weaker than expected but it seems that the housing construction has already turned a corner. Single-family starts should see a stronger June due to the limited housing supply and record-low mortgage rates, which have sent applications to purchase a home rising for the last nine weeks straight.
The rising buyer demand should also inspire builders. A data released by Redfin earlier this week shows that homebuying demand increases by 25% over pre-pandemic levels.
The latest data from the National Association of Home Builders proves as much. Based on their latest survey, builder confidence jumped from 21 points to 58 this week. Anything over 50 indicates general optimism among builders. Their chief economist said that as the nation reopens, the housing is currently well-positioned to lead the economy forward.
Full details on forbes.com