Single-family construction rose 21.7% in May, as demand for new construction increased amid a drop in existing homes coming onto the market. Total housing starts rose to 1.63 million annually last month from 1.34 million in April, even though economists were expecting a slight dip of about 0.8%.
The May pace of construction was the highest since April 2022, when starts hit 1.8 million and home builders were most active in the Midwest, Realtor.com reports.
New construction is a bright spot in an otherwise despondent housing market. For the buyers who brave 6% mortgage rates, there are few options in the resale market, which continues to funnel demand for new homes.
In fact, demand is so strong that homebuilders are pulling back on sales incentives, such as price cuts, the National Association of Home Builders reported on Monday.
Builders also reported that they were feeling upbeat about the housing market for the first time in nearly a year.