Yesterday’s Census Bureau report for August is an indication of strength for the housing market. While the number of permits issued, which can signal how much construction is in the pipeline, decreased by 5.5 percent, home building rose in August as housing starts increased 9.4 percent compared with a year ago. The growth in housing starts is welcomed news after two consecutive monthly declines.
Whether students are beginning middle school or their last year of college, back-to-school season is here. Although many students may grimace when they hear “back to school,” they won’t regret pursuing a higher education as adults as they compete for well-paying jobs and one day, hopefully, buy a home.
The U.S. economy remains on an impressive growth streak. Last month, the Commerce Department reported that the gross domestic product, the broadest measure of goods and services produced in the economy, grew at a 4.1 percent annualized rate in the second quarter, the strongest pace of growth since 2014. The economy has added jobs every month for 94 consecutive months, producing the lowest unemployment rate since 2000.
Limited housing supply and growing millennial demand continue to drive home prices higher across the country. Even when adjusted for income growth and mortgage rates, prices are 11.4 percent higher than a year ago, according to our Real House Price Index. Unless income growth accelerates and begins to outpace house price appreciation, or housing supply surges, prices will likely continue to rise in the coming year, which may be discouraging to renters looking to buy a home.
The short answer is yes. Home buyers looking for more housing supply to choose from can take heart, as Thursday’s Census Bureau report on housing construction showed builders are starting work on additional housing, inching closer to balancing inventory with demand.
With unadjusted house prices recently eclipsing their 2006 housing boom peak, housing affordability is a concern in the industry and for potential home buyers. Existing home owners, by definition, can afford one so, when we are speaking about housing affordability, it is really a conversation about first-time home buyers.