Editor’s Note: With Housing Virginia’s transition to HousingForward Virginia, we’ve decided our weekly Microblog deserves a new name too. That’s why we’re now calling it The FWD (pronounced “forward”).
Could housing starts be a sign of good things to come?
The American housing market hasn’t always been a source of good news. Even worse, the somber economic situation we’re in today may be giving some of us flashbacks to the time when our fairweather friend the “housing market” really let us have it back in 2008. But could housing be a way out of our current economic slump? Many believe that, much like many pre-2008 recessions, increases in housing starts due to low interest rates may be our ticket out of this.
The last few months of housing starts shown in the graph below could be cause for great optimism. July 2020 housing starts are up 22.6% from June and up 23.4% from the year before. This follows significant decreases in starts from February to June due to COVID-19.
Some are already calling this boom “a rare pandemic bright spot”, mostly due to multifamily starts, which increased 56% between June and July 2020. So how exactly is housing bolstering the economy? Some explanations include:
This progress is despite unprecedented price strains on housing costs, largely due to the increased price of lumber. The National Association of Homebuilders reports that new homes are approximately $14,000 more expensive than three years ago due to recent significant increases in the cost of lumber. Many theories abound here as well:
- Climate-change induced growth of tiny pine beetles
- COVID-related shuttering of lumber mills
- Increased demand
So, even against monumental building costs, housing is still making big gains. While prices are up for new homes, the increase in supply should eventually bring them back down. We’re hoping this is a sign of good things to come. Make sure you’re following us on Facebook and Twitter, and receiving our weekly emails to stay updated.