In what might seem contrary to reduced figures on existing-homes for sale in August, produced by the National Association for Realtors, the most recent report [1] from the U.S. Census Bureau on housing starts in August points toward optimism in the housing market.
Year-over-year, permits have increased 8.3 percent, and starts have increased 1.4 percent. According to the press release, this increase in permits bodes well for predicting housing starts in the future. Since July, single-family housing starts have increased 1.6 percent to approximately 851,000, which should help with inventory restraints.
According to the Census Bureau, residential construction jobs are also increasing at a rate of 3.8 percent year-over-year, which should supplement future housing starts and the ensuing construction. Mark Fleming, Chief Economist at First American, points out how the construction market differs from other labor divisions.
“Home building is a unique labor market in that it does not lend itself to outsourcing and automation, and therefore, growth in residential construction jobs supports further improvement in the pace of home building.”
Fleming is confident that August’s labor employment numbers will finally point to an increase in home building, although, he notes, the industry still has quite a way to go in order to reach the year's peak experienced in February.
“Despite this month’s improvement, total housing starts are now 70,000 units below the recent peak of almost 1.3 million units in February of this year, which was a 9.5-year high. The lack of home building is a major reason why the market has been strained by a lack of inventory. Homebuilders continue to complain they cannot find skilled labor, especially framers, and that buildable lots remain in short supply. In fact, earlier this month [2] I discussed the potential implications of Hurricane Harvey and Irma. Damage to the housing stock will, locally, increase that housing supply shortage and further increase demand for construction workers.”