More residential units were under construction in July than any point since February, according to new data from the Commerce Department this week. Housing starts are now at an annual rate of 1.211 million, the highest level in nearly half a year. This represents a 2.1 percent monthly gain.
Building permits, however, dipped 0.1 percent on a month-over-month basis to a seasonally adjusted annual level of 1.152 million. Permits for residential construction have fallen 2.2 percent since January. The lackluster construction levels are largely to blame for the current deficiencies of home inventory on the market.
As home prices have ballooned beyond affordable levels for the median household, U.S. home builders have turned their attention to multi-unit complexes. Apartment construction increased 8.3 percent, an attempt to meeting ever-growing demand from renters.
Home builders are likely to up the pace of permit applications for new home construction as historically low interest rates are expected to continue to push home sales higher. Today, mortgage rates are near all-time lows. Conforming no-point 30-year fixed rates averaging 3.375 percent while the 15-year rate is near 2.625 percent.
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