New home building in the U.S. rose more than expected in the month of June, with an 8.3 percent increase to a seasonally adjusted rate of 1.2 million units, according to the Commerce Department.
This is the highest it has been in a 4-month period. Economists polled by Reuters only predicted a 1.16 million unit increase for the month.
Home construction has risen by 3.9 percent year-to-date, but according to Tampa Bay that increase does not make up for the falling number of homes being listed for sale. There are far less existing homes being listed for sale and the prices of new homes are growing and have gone past six-times wage growth.
“Single-family housing starts have been running way too low,” Morgan Stanley economist Ted Wiesman added, “as inventories of home available for sale have fallen to what the National Association of Realtors called ‘astoundingly low’ levels during the spring selling season. Labor shortages, land shortages, regulatory bottlenecks, and, recently, rising lumber costs with the Canadian lumber tariffs have restrained new construction.”
While the number of existing homes being listed has decreased, starts for single-family homes has increased by 7.9 percent. Builders are focusing more on single-family housing rather than multi-family units like apartments, per Tampa Bay.
However, multi-family starts did jump 15.4 percent in June, up from May, but still down 10.7 percent from a year ago, per Builder Online.
“The jump in multi-family appeared based on the data to be concentrated in the Northeast and Midwest, where total starts were up 83.7% and 22%, respectively. Single-family units were up a more modest 9.3% in the Northeast and down 3.6% in the Midwest, with the South posting a 7.2% increase from May and the West jumping 10.6%.”
Though there is confidence among home builders, according to Newsmax, that total hit an eight-month low in July. The reasons? Due to the higher prices of lumbar, labor, and a shortage of building lots.
Looking to the Manufactured Housing Alternative
One of the three issues above noted by Newsmax can be solved with manufactured housing, namely, the higher costs of labor.
Manufactured homes are routinely less expensive and time-consuming to produce, as industry professionals – and a growing number of investors – know. Buying in bulk can also help with some of the marginal costs, when compared to typical on-site builders, vs. tract builders.
These are among the reasons why the U.S. Census Bureau reports that manufactured homes are about 1/2 the cost of conventional housing. See another, consumer-focused and related report, linked here.
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Submitted by Julia Granowicz to the Daily Business News for MHProNews.