Confounding economists’ expectations, US private housing starts in July surged 22.6% on the previous month, and ended up 23.4% higher than the count for July 2019, according to figures published yesterday by the US Census Bureau and Department of Commerce.
Analysts say that despite the coronavirus pandemic, the market is buoyed by low interest rates and a shift to the suburbs.
There were 1.496 million starts in July 2020, up on the 1.22 million estimated to have begun in June, and the 1.212 million calculated for July last year.
The number of building permits was also higher, at 1.495 million in July, up 18.8% on the previous month and 9.4% on July 2019.
"US housing starts blew the roof off of expectations in July … these are the kind of gains seen after storms/hurricanes," wrote Jennifer Lee, senior economist at BMO Capital Markets, in a research note seen by ABC News.
Private housing completions in July were up marginally at a seasonally adjusted annual rate of 1.28 million, 3.6% above the figure for the previous month and 1.7% up on July 2019.
"The market is being buoyed by historically low interest rates, a focus on the importance of housing and a shift to the suburbs as more buyers are seeking homes in suburban communities, exurbs and more affordable low density markets," said Robert Dietz, chief economist at the National Association of Home Builders.Â
Writing earlier this month, Dietz called the surge in for-sale housing "exceptional" given the damage the coronavirus pandemic has done to the US economy, with new jobless claims reaching 1.4 million in July, and a second-quarter GDP shrinkage of -33%, the worst on record since the Second World War.
The surge in house building has a downside, however – lumber prices have jumped more than 110% since mid-April, adding around $14,000 to the cost of a new single-family home, the NAHB calculates.
Image: The market is buoyed by low interest rates and a shift to the suburbs, say analysts (Rgbe/Dreamstime)