Housing starts shot up by a stunning 22.6% in July, the U.S. Commerce Department said Tuesday. It was the biggest monthly gain in new home construction since the fall of 2016.
"Builders have been busy as mortgage rates remain near historic lows (falling below 3% for a period of time) while cooped-up buyers cannot find enough houses to view," says Yelena Maleyev, an economist with the accounting firm Grant Thornton.
Would-be homebuyers who were housebound during coronavirus lockdowns earlier in the year have been flocking to the housing market this summer. But they've often been disappointed by skimpy real estate listings.
Builders are trying to satisfy the hunger for housing as quickly as they can — and other new data indicates the demand will keep them busy for a while.
Residential building permits for future construction last month jumped by 18.8% compared to June. That increase was the largest in 30 years, according to Bloomberg.
One of the factors driving the building boom is a "noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets," says Robert Dietz, chief economist for the National Association of Home Builders.
In other words, working Americans who've been turned into telecommuters by COVID-19 are trying to flee New York, San Francisco and other big cities for areas where living costs are lower and social distancing is less challenging.
How to find a great home and great rate
Until more new homes are on the market, buyers may encounter rising prices and even bidding wars.
Real estate brokerage Redfin says the nation median home price in July was up 8.2% from a year earlier, and that its agents ran into competing bids with more than half the offers they placed last month.
"One of my clients recently bid $100,000 over a home's asking price and only had the eighth-highest of 15 offers," says Greg Mathers, a Redfin agent in the San Francisco area.
Buying a home can be difficult in today's market, but it's not impossible, says Danielle Hale, chief economist for Realtor.com.
"With the help of low mortgage rates and a new, slightly-suburbanized list of must-haves in a home, buyers are continuing to get into the housing market to look for their piece of the American dream — especially if it includes a home office," Hale says.
To find what you want, you just have to be patient and willing to shop around. A lot.
The same goes if you're eager to score one of today's incredibly low mortgage rates. Average rates for 30-year fixed-rate mortgages have been rising off their recent all-time lows, but deals are still available — if you know how to look for them.
Mortgage rates can be vastly different from one lender to the next, so experts recommend that you get and compare rates from at least five lenders, to find the best rate available in your area.
Then, comparison shop some more when the time comes to buy your homeowners insurance. Get quotes from multiple insurers and review them side by side — to find good coverage at the right price.