New home starts in the US have soared this autumn on the back of low inventory levels in the resale sector. According to the latest statistics, new residential construction saw a 7.6% rise in September. This uptick has brought the new-home market share to almost a third, an unprecedented high.
Rock-bottom supply boosts new home starts
Despite rising interest rates, demand for housing in the US remains strong and as a result, inventory levels cannot keep up. Many buyers have therefore turned to new construction in their search for a home, in numbers not seen before.
The US Department of Housing and Urban Development reported that new home starts rose by 7.6% in September. The latest increase brings the annual rate to 1.36 million units.
Single-family homes saw a 3.2% rise, bringing their seasonally adjusted annual rate to 963,000. Despite September’s increase, the rate of starts in this sector still remains 12.8% below that registered in 2022. However, new homes in the multi-family sector (apartments and townhouses) skyrocketed by 17.6%.
New homes constitute almost one-third of the market
The recent increases in new home starts to consolidate this sector’s position in the residential housing sector. In August, 31% of properties on the market in the US were new builds, more than double the historic average of 12 to 14%.
“Despite ongoing challenges in the market, the housing deficit of resale inventory continues to provide some market support for builders,” commented Robert Dietz, Chief Economist at the National Association of Home Builders.
The latest figures also confirm the continuing upward trajectory for new residential construction. Earlier this year, Knight Frank said that US new homes “were 2023’s surprise winner”, within the context of a challenging property market.
New home starts in Southwest Florida
This part of the Sunshine State reflected the national trend, with a rise of 15% in the number of permits in August compared to July. Like the rest of the US, Southwest Florida suffers from a dearth of inventory, with a drop in listings in all counties.
As the graph below shows, new permits in Charlotte County this year lag slightly behind figures registered in 2022. However, monthly additions in 2023 are well ahead of those in 2019, 2020 and 2021.
New construction is the powerhouse
However, Florida property prices continue to rise. As a result, the state’s real estate ranks as the second most valuable in the country. Analysts believe the recent rise in its value lies in new construction. A recent Zillow report referred to new homes as “the powerhouse behind the uptick in real estate values”.
(Source: Florida Realtors, FGCU)