The rate of new home construction is an important housing market indicator. It not only says something about the economy and buyer demand, it also tells you something about where home prices are headed. If new home construction is rising, inventory is improving and – with more homes available for sale – price increases are more likely to moderate.
That means every prospective buyer benefits when more new homes are built, since the added housing supply helps keep prices in check. So what's currently happening in the new home market? Well, according to the U.S. Census Bureau and the Department of Housing and Urban Development's monthly measure of new residential construction, the number of new homes completed in June was nearly 5 percent higher than it was last year at the same time. That's good news for home shoppers.
Similarly, the number of permits to build new homes rose from last year, increasing 1.4 percent year-over-year. But while housing completions and building permits are up over last year's pace, they both declined from where they were in May. That could be an indication that construction in the near term is beginning to slow.
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