When settlers first came to New Jersey, building a home was how they kept a roof over their heads. Even up to a hundred or so years ago, building a home was fairly common. In the more modern era, tract houses began to spring up and more people decided to buy a finished product instead. Now, very few people build their own homes. Real estate developers also do not build as many now as they did decades ago.
Even so, new-home construction is once again on the rise. MarketWatch estimates that the drop in interest rates over the summer of 2019 helped create this surge. Compared to last year, there has been a 13.6% increase in building activity. There has also been an 11.1% increase in residential permits to build housing units that are privately owned.
Another reason many homebuyers may now decide to turn to building is a shortage of homes. While more people pour into the market looking for homes, they are faced with fewer ideal choices. To add to this, homeownership tenure has increased. Rather than move into larger homes, more Americans are refinancing and staying put.
CNBC estimates that housing permits are now at a 12-and-half year high. The news agency also credits lower mortgage rates for this change. Single-family home construction, in particular, is experiencing a 10-month high. Experts also see increases in the multifamily sector, which requires far greater capital investment.
It is not clear how long this trend will last. While it does, it may help to stimulate the economy and delay any upcoming market crashes. Housing construction employs workers. Adding new units to the housing market also helps to increase supply, which may reduce per-unit demand, and hopefully, make homes more affordable.