Housing market conditions continued to improve, but construction activity was still at a low level, reflecting the restraint imposed by the substantial inventory of foreclosed and distressed properties and by tight credit standards for mortgage loans. Starts of new single-family homes declined in July, but permits increased, which pointed to further gains in single-family construction in the coming months. Both starts and permits for new multifamily units rose in July. Home prices increased for the sixth consecutive month in July, and sales of both new and existing homes also rose.
This has been a bright spot over the last six months. Let’s take a look at some graphs, courtesy of Calculated Risk:
Total existing home sales have been steady at low levels for most of this expansion, but have bumped higher over the last 3-6 months. In addition, the inventory situation is far better, telling us that supply has been dwindling.
The top chart shows that new homes sales have come off of historically low levels and are now showing a bit of life. More importantly, the inventory of new homes available for sale is now at extraordinarily low levels.
The top chart shows that building permits have moved higher at a good rate — especially considering where they came from. The bottom chart shows housing starts. While we have seen improvement, these figures are still at low levels.
Construction spending in the residential area spiked during the housing bubble and has since fallen. Over the last year, we’ve seen a gradual increase in both residential and non-residential. Also note the decrease in public investment, which has hurt the recovery.