WASHINGTON (AP) – Construction of new American homes increased 22.6% last month when homebuilders jumped back from a silent induction by the coronavirus pandemic.
The Department of Commerce reported Tuesday that new homes were being built at an annual rate of nearly 1.5 million in July, the highest since February and well above what economists expected. Beginning of housing has now risen three straight months after subsiding in March and April as virus outbreaks paralyzed the U.S. economy. The rate of construction last month was 23.4% above July 2019s.
“U.S. housing began to remove the roof of expectation in July … …. these are the kinds of gains seen after storms / hurricanes,” wrote Jennifer Lee, senior economist at BMO Capital Markets, in a research note. Strong demand and limited supply drove builders to break ground.
The big gains came from the construction of apartments and bugs, which went up 56.7%. But also household construction of households is also picking up 8.2%.
Construction increased significantly – 35.3% in the Northeast Polder, 33.2% in the South, 5.8% in both the Midwest and the West.
Applications for building permits, a good indication for future activity, jumped 18.8% from June to an annual rate of 1.5 million, the highest since January and up 9.4% from July 2019.
The National Association of Home Builders announced Monday that builders’ confidence this month is in line with the record high first reached in December 1998. “Strong demand and a record level of confidence from home builders will support housing start in the second half of 2020,” they said. wrote economists Nancy Vanden Houten and Gregory Daco of Oxford Economics.
But they warned that the failure of Congress to approve another rescue package could take a toll on the economy. “The still widespread coronavirus and an economy struggling to recover without fiscal support could limit the ‘hip side’ ‘for the housing frontier,’ she wrote.
