New Construction Expected to Increase:
The biggest issue with our housing market over the past two years is a huge shortage of available inventory with supply sitting well below 7 months at current sales paces. So, it is welcome news that construction rates of new home builds are projected to hit 1.4 million units on a yearly basis.
The LegalShield Housing Activity Index rose 3.9 points to 115.3 in July, driven by improvements in both the foreclosure and real estate components of the Law Index. The Housing Activity Index is up 1.8% for 2017 and is currently at its highest point since May 2006. Housing starts improved in June (as the Index has been signaling for several months) but remain below forecast levels, and year-over-year growth is essentially flat. The housing market continues to face significant headwinds, including higher prices for inputs (particularly lumber) and regional shortages of both skilled construction labor and land. However, the combination of existing home inventories near historic lows and nationwide housing prices now exceeding pre-recession levels should lead to increased housing activity. If the housing supply finally picks up to match current demand, construction investment should rise and housing starts may climb to an annual rate of 1.4 million or more by the end of the year.
“The LegalShield Housing Activity Index has a strong record of closely tracking U.S. housing starts over the last 15 years – and the Index continues to suggest that housing starts should be stronger than they currently are,” said James Rosseau, LegalShield’s chief commercial officer. “The Index is consistent with the fact that U.S. consumers are employed – as underscored by a strong June employment report – with solid credit, manageable debt levels, and heightened confidence about the economy. These factors, combined with historically low home inventories, point to a revival in housing activity.”
The LegalShield data was released in public news release, you can read the official press release here.
What Happened to Rates Last Week?