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Builders just aren’t keeping up. Despite the lack of homes on the market making buyers ever more frazzled, the number of completed new homes dropped month-over-month in every region of the country—except one.
The South, which is luring companies and new residents with its lower cost of living and more affordable housing prices, had about 634,000 brand-spanking-new homes go up for sale in July, according to the seasonally adjusted numbers in the latest residential sales report jointly released by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That’s a 15.3% jump from June and an impressive 18.5% increase from July 2016.
(realtor.com® looked at only the seasonally adjusted numbers in the report. The numbers have been smoothed out over the year to correct for seasonal fluctuations.)
One of the best indicators of how many new homes will hit the market in the coming months is the number of permits issued to construct them. Nationally, builders received 1.223 million permits in July. This was down 4.1% from June to July, but was up 4.1% from July 2016.
The culprit behind the monthly drop was buildings with five or more units. The number of these multi-family buildings, which are overwhelmingly rental apartment buildings but also include condos, fell12.1% since June and dropped 11.7% from July of the previous year.
However, in somewhat better news, roughly 811,000 new permits were issued in July to put up single-family homes. Builders received the same amount in June, but the number of new permits rose 13% from July of 2016.
“It wasn’t bad, it wasn’t great,” says realtor.com’s Chief Economist Danielle Hale of the construction report. “It was more of the same gradual improvement.”
That doesn’t mean that those hoping to score a new home should get too excited. The number of new homes approved but not started was down 4.8% from June, and fell 5.6% from July 2016.
Meanwhile, the number of new homes ready for inhabitants dropped 6.2% from June. But there was a 8.2% increase in the number of completed homes from July of the previous year. And while the number of finished single-family homes slipped 1.6% from the previous month, they were up 8.8% annually.
“We’re seeing slow but steady progress,” Hale says of the in-demand-abodes. “It’s important because we know we don’t have enough homes on the market.”
Just don’t expect those homes to come cheap. The median price of a newly built home was $310,800 in June, according to the most recent U.S. Census Bureau and U.S. Department of Housing and Urban Development data. That was about 17.8% more than median cost of an existing home (one that’s previously been lived in) at $263,800 in June, according to the most recent data from the National Association of Realtors.
The most new homes were completed in the South, followed by the West with about 256,000 completed abodes. That’s down 25.4% from the previous month and represents a 8.9% decrease from the previous year.
The Midwest had about 176,000 residences completed in July, down 18.1% from June but up 1.1% annually. Only about 109,000 new homes were finished in the Northeast. That’s a 24.3% monthly drop, but a 13.5% annual increase.
“The housing shortage in America will intensify if new construction remains as lackluster as it was in July,” Lawrence Yun, the National Association of Realtors chief economist, said in a statement. “Because of this continued shortage, expect rents and home prices to rise.”
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