Experts React to Housing Starts Report

Experts are weighing in on the recently released new residential construction report from the Census Bureau. According to the report, July’s housing demand is ablaze with would-be buyers driven by low mortgage rates and a desire (especially among Millennials) to migrate to the suburbs from the cities. In order to try to meet rising demand, builders have ramped up efforts.

Doug Duncan, Chief Economist at Fannie Mae, offered his insight and further details on the Census Bureau’s new residential construction report: “Today’s new residential construction report from the Census Bureau showed a stronger-than-anticipated reading for July, as well as upward revisions for May and June.”

Specifically, new housing starts rose 22.6% to an annualized pace of 1.50 million units, falling just short of the pre-coronavirus February level of 1.57 million. This increase was driven by both single-family and multifamily starts, which rose 8.2% and 58.4%, respectively.

Also chiming in was Realtor.com's Chief Economist, Danielle Hale: “The housing market appears to be recapturing much of the momentum it had going into 2020. Looking forward, there could be some new challenges ahead for builders as suppliers have been caught off guard by the strong bounce-back in demand, and shortages could lead to price increases that slow down the pace of new home sales. Already, the number of markets with abundantly available and affordable homes for sale is dwindling. However, with the help of low mortgage rates and a new, slightly-suburbanized list of must-haves in a home, buyers are continuing to get into the housing market to look for their piece of the American dream--especially if it includes a home office.”

Further expounding on the report is First American Deputy Chief Economist Odeta Kushi, who shared what is happening, and what we can expect: “July’s housing starts report reveals the rebound in building continues as builders are responding to surging demand in an environment of limited existing homes available for sale. The year-over-year increase in permits, starts, and completions indicates that builders are eagerly responding to record low mortgage rates, a limited supply of existing homes for sale, and sturdy demand driven by Millennials aging into homeownership, but rising material costs may dampen that momentum in the months to come.”