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With much of life in the U.S. now focused primarily in residential neighborhoods, it stands to reason that the business of homes is booming.
New housing starts in July rose 22.6% over June, reaching an annual pace of 1.5 million units, the U.S. Census Bureau said in its monthly residential construction report released on Tuesday. The jump was largely due to multifamily construction, which started work on 58% more units than it had in June.
The massive spike in multifamily could be explained by projects finally getting off the ground after delays related to the coronavirus pandemic, Fannie Mae chief economist Doug Duncan said in a statement released in reaction to the Census Bureau report. Even so, year-to-date construction starts have outpaced 2019 overall.
The current pace of construction has become so furious that the price of lumber has more than doubled since April, National Association of Home Builders Chairman Chuck Fowke told CNBC. Though part of that issue was caused by the shutdown of most major lumber mills in April and May, Fowke believes the momentum is likely to slow in the coming months.
Regardless, the industry believes the outlook is rosy. The monthly NAHB Housing Market Index rated homebuilder confidence in July at the highest level in the 35-year history of the survey, CNBC reports, tied with December 1998.
The index is based on single-family homebuilder confidence in three areas: current sales climate, the projected sales climate over the next six months and the level of buyer traffic. Though all three factors rose in July, buyer traffic soared to a record high.
Historically low interest rates have drawn new buyers into the housing market, NAHB chief economist Robert Dietz told CNBC. With housing supply having already been dragging behind demand, homebuilders sense a ripe environment.
CORRECTION, AUG. 20, 9:45 A.M. ET: A previous version of this article's headline misstated the findings of the U.S. Census Bureau report. This article has been updated.
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