You can tell a lot about the housing market by watching the balance of supply and demand. When there are too few homes for sale, the market's harder on home buyers. Too few homes leads to rising prices and buyer competition. These days, fortunately, the number of homes for sale is improving. That's good news for buyers, as it'll help slow price increases after years of double-digit spikes. But inventory's still low, and a big part of reaching better balance is the pace of new home construction. In short, we need more new homes.
So what's happening in the new home market? Well, the most recent New Residential Construction report from the U.S. Census Bureau and the Department of Housing and Urban Development shows the number of single-family homes that began construction last month was higher than the month before. In fact, it rose 3.4 percent. That's encouraging, as it means a bump in new home supply may be on the way.
However, while housing starts rose, permits to build future new homes fell 3.5 percent. That's an indication that builders who've recently ramped up production may soon be pulling back, due to concern about economic conditions and buyer demand.
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