The Commerce Department has recently shared that developers are moving the quickest they have in eight years to bring new inventory to market.
With rates still at all time lows and demand being strong, time is of the essence to create quality supply.
“A fresh supply of new homes will therefore reach the market in upcoming months to help relieve the inventory tightness,” says Lawrence Yun, the chief economist for the National Association of REALTORS®. “There is no need to worry about an oversupply. Even more production would be welcomed.”
As recent as July reports indicate that single family home inventory was resurging up 12.8% month over month with numbers adjusted to a seasonally annual rate of 782,000 units. This is great news for families in search of their place to plant roots and call home. On the other side of the spectrum our investors found challenges in their searches for property with the number of multi-families declining 17% to 424,000 units in July.
“Our builders are reporting more confidence in the market, and are stepping up production of single-family homes as a result,” says NAHB Chairman Tom Woods. “However, builders are still reporting problems accessing land and labor.”
We see the challenge in the Boston area with a limit in the amount of land that is available. It isn’t uncommon for urban areas to have short, few story buildings being torn down to make room for multi-story condominium buildings reaching the sky. Drive just a short distance outside of downtown Boston and a similar strategy is happening in our affluent suburbs. Many older and existing single family ranch or capes that no longer accommodate the growing number of families are being demolished and replaced with two and three story homes offering a new home and plenty of space for a premium price.
“This month’s drop in the more volatile multifamily side is a return to trend after an unusually high June,” says NAHB Chief Economist David Crowe. “While multifamily production has fully recovered from the downturn, single-family starts are improving at a slow and sometimes intermittent rate as consumer confidence gradually rebounds. Continued job and economic growth will keep single-family housing moving forward.”
Looking forward in the northeast for what is to built, new housing permits for single families were down by 1.9% for July. However, it is suspected this is not to be alarming as this the summer market and there has been a trend for permits to be intermittent throughout the year.