How Recent Housing Trends Impact Homebuyers
Data from the U.S. Census Bureau shows that new housing completions were up 15.5% year-on-year in June, reaching an annualized rate of 1.468 million units, signaling strong follow-through on earlier construction starts. However, the same period saw a 4% year-on-year decline in housing starts, dropping to an annualized rate of 1.434 million units. This suggests that some builders may be hitting the pause button on new projects, likely due to factors such as rising material costs, labor shortages, and higher interest rates. This decline in starts, despite the rise in completions, reflects growing caution in the market as builders assess economic uncertainties and demand fluctuations.
For consumers, these trends in housing completions and starts have several implications:
Tightening Inventory: The decline in housing starts suggests that fewer new homes will be entering the market in the near future. This could lead to tighter inventory, meaning there will be fewer options available for buyers. In a competitive market, this could drive up prices as demand outstrips supply.
Potential Price Increases: With new housing completions up, some inventory is currently being added to the market, which may offer some short-term relief for buyers. However, the decline in new starts indicates that this trend might not continue, potentially leading to price increases down the line as the supply of new homes dwindles.
Delayed Purchase Decisions: For prospective homebuyers, especially those waiting for new builds, the data suggests that there may be delays in the availability of new homes. Builders are being more cautious, possibly leading to extended timelines for new projects to begin, which could impact when homes are ready for purchase.
Market Uncertainty: The mixed signals from the market—rising completions but declining starts—reflect uncertainty among builders, possibly due to economic factors like rising interest rates, inflation, or material shortages. For consumers, this means navigating a market that could shift, with the potential for both price increases and limited housing availability in the future.
Overall, buyers may need to act more quickly when they find a suitable property, as the tightening supply could lead to increased competition and higher prices.