Housing starts jumped in March, recovering from a bleak February that included wild winter storms in the South, according to a recent report from the Census Bureau. Single-family housing starts rose 15.3% over the month to a pace of 1.24 million annualized units. That’s up 37% from a year ago, but it’s important to take into account that the COVID-19 virus first took hold of the housing market in March 2020, said Doug Duncan, chief economist at Fannie Mae.
For now the supply of existing homes for sale and an elevated level of new homes sold — but not yet constructed — should help bolster a strong construction pace of new housing starts moving into the spring buying season.
“While housing demand is expected to remain strong, we expect it to diminish somewhat as the year progresses due to the waning effect of the COVID-19 disruption to homebuyers’ purchasing timelines,” Duncan said.
A positive indicator for the housing market is the overall number of permits issued for single-family homes, which increased 4.6% from February. That number is a good indicator of future construction, according to First American Deputy Chief Economist Odeta Kushi. She also said: “There continues to be a demographic-fueled shift away from renting to home-owning driven by millennials aging into homeownership, but the challenge is the historic lack of supply.”
Added Matthew Speakman, Zillow chief economist: “There is no avoiding the fact that prices of key materials are rising at their fastest rates in decades, and availability is often limited due to pandemic-driven supply chain disruptions. The question now is whether this enduring optimism can continue to translate into activity, and if a continuation of these conditions will eventually force builders to throttle back.”
“In nearly every market, 20% more inventory means 20% more home sales,” said Lawrence Yun, chief economist for the National Association of Realtors. “Today’s news on the new home construction surge is, therefore, highly welcomed, especially in light of major challenges on material costs and soaring lumber prices.”
Source: https://www.housingwire.com/
