Increased Building Permits Are An Encouraging Sign

Posted by John Sabia on Tuesday, November 24th, 2015 at 7:22am.

One of the best ways to measure how many new construction homes will be built in the coming months is to look at the number of building permits issued. The US Census Bureau and Department of Housing & Urban Development (HUD) tracks building permits each month to offer an outlook for the new construction real estate market.

In October of this year, government issued permits for single-family home construction increased by 4.1 percent as compared to the previous month. This is very good news considering housing starts (the number of new houses that broke ground during the month) fell 2.4 percent from the month before. Although fewer homes broke ground in October, expectations are that new construction activity will soon rebound.

Michelle Girard, chief economist at Royal Bank of Scotland spoke about housing fundamentals are in fact solid. She told Reuters, “Household formation is rising, demand for new homes is outstripping supply, and home builder confidence remains near its highest level in a decade. New home construction is important to the health of the overall housing market, as additional for-sale inventory can help balance the market and moderate home price increases." More about this here.

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