rates are expected to increase and continue to rise to more typical levels
Chicago, IL (PRWEB) July 23, 2015
According to a July 17th joint release from the U.S. Department of Housing and Urban Development and the U.S. Department of Commerce, construction increased in June 2015. The Federal Savings Bank thinks this jump in construction will also meet the rising demand for housing as first-time home buyers decide to invest in real estate.
Construction increases in June
The volume of building permits in June jumped 7.4 percent when compared to the previous month. The number of authorized privately-owned housing units was also 30 percent higher on a year-over-year basis.
In addition to building permits increasing during the month of June, the total number of housing starts rose 26.6 percent from the previous year.
The joint press release also indicated housing completions of privately-owned structures increased 22 percent when compared to June 2014.
According to The Wall Street Journal in a July 17th release titled “Apartment Demand Drives Home Construction”, multi-family housing was the primary driver of new construction. In fact, the number of new condos and apartments increased 29.4 percent in June when compared to the previous month.
While construction remains historically low, the steady rise seen in June demonstrates the housing market continues to strengthen.
National Association of Home Builders indicates heightened confidence
An NAHB recent July 16th press release indicated builders' confidence in the real estate market hit its highest level since November 2005, according to the NAHB/Wells Fargo Housing Market Index. Specifically, builder confidence hit a level of 60. Any number more than 50 translates to a majority of builders viewing current conditions as good instead of poor, noted the press release.
"The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace," said NAHB Chairman Tom Woods. "As we head into the second half of 2015, we should expect a continued recovery of the housing market."
Confidence in the housing market further indicates positive news for real estate professionals as well as individuals looking to apply for monthly mortgages and invest in new homes. More construction and higher demand for housing will continue to bolster the market.
"This month's reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth," NAHB Chief Economist David Crowe stated. "However, builders still face a number of challenges, including shortages of lots and labor."
Demand drives housing production
According to Mortgage Bankers Association's Builder Application Survey from July 16th, applications for new homes jumped 1 percent on a month-over-month basis.
"As house prices continue to recover, mortgage applications for the purchase of newly constructed homes increased slightly in June. Application activity in June was slightly higher compared to the past two years, leading us to estimate that new homes sales increased 8 percent from May on a seasonally adjusted annual basis," said Lynn Fisher, the MBA's Vice President of Research and Economics.
Higher demand likely initiated the rise in construction and applications for building permits.
Contact the Federal Savings Bank, a veteran owned bank, to learn more about mortgages.