Boost in New Home Construction
Persistent scarcity of existing-home listings has led to a surge in demand for newly built homes. To meet the needs of American homebuyers, construction of new homes witnessed a significant rise in July.
Construction Up by 3.9%
In an effort to address the growing demand, construction activity increased by 3.9% last month. The government revealed that housing starts reached an annual pace of 1.45 million, up from 1.4 million in June. These figures represent the number of houses that would be constructed in a year if the same rate of construction were maintained throughout.
Single-Family Construction Leads the Way
July saw a notable boost in single-family construction, while multi-family construction remained relatively unchanged. The surge in aspiring homeowners looking for options in the resale market has played a role in this boom.
Potential Challenges Ahead
While builders are benefitting from strong buyer interest, high mortgage rates may present a challenge to the ongoing demand for homes. This, in turn, can have an impact on homebuyers in the coming months.
Positive Signs for Future Construction
Building permits, an indicator of future construction activity, indicated a slight increase of 0.1% to reach a rate of 1.44 million.
Market Reaction
The news of increased construction activity had an impact on the market. U.S. stocks were expected to open lower on Wednesday, while the yield on the 10-year Treasury note rose above 4.2%.
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