New Construction Sales Stalled in August, But Permits Increased
New Construction Boom in Early Summer
The new home market was hot this summer, as the lack of available existing homes led more prospective buyers to explore the option of purchasing a newly built house. This trend noticeably bolstered both sales and home-building activities, paving the way for a booming new construction market.
Slowdown of New Housing Starts in August
However, as August rolled in, a palpable slowdown in the market was observed. The number of new homes that began construction fell sharply, according to newly released numbers from the U.S. Census Bureau and the Department of Housing and Urban Development. This sudden decline is mainly attributed to a significant drop in multi-family construction, with single-family home building also witnessing a 4.3 percent decline. One of the leading causes for this slowdown is noted to be the elevated mortgage rates that potential buyers are now facing.
Increase in New Permits Authorized
Despite the slowdown in construction activity in August, there may be a silver lining - The number of permits authorized for building new homes saw a notable increase, up by 6.9 percent. This upward trajectory in permits for new homes signals that builders remain confident, and that the slump in August may only be a temporary setback before building activity picks back up.
While the new construction market experienced a brief slowdown in August, primarily due to a drop in construction and elevated mortgage rates, the future outlook remains positive. The increase in permits for new home construction is a promising indicator that building activity is poised to bounce back, pointing to the market’s continued strength and resilience.