Home construction has been a key component in the U.S. economy, and as home sales and home prices continue to rise, so has new home construction.
According to the U.S. Census Bureau’s report issued last Thursday, July had a 6.8% increase in building permits to an annual rate of 812,00, the highest rate in four years, and 29.5% higher than July of 2011. This number was unexpected, as forecasts made by a consensus of housing industry experts showed the permit rate to be more around 750,000 for July. This is a good sign for those prospective home buyers who are looking at new homes for sale in the Ashburn or Leesburg areas, as Loudoun County is one of the top fastest growing counties in the nation.
A rise in building permits is a sign that builder confidence is growing, and could very likely lead to an increase in jobs. Chief economist for the National Association of Home Builders, David Crowe, estimates that about three jobs are created for every new home that is built and that a rise in applications for building permits is a good indicator of where the housing market is going. “If you’re looking into the future, ” he said, “permits are a truer picture of the market.” An increase in construction is also quite possibly a response to the high demand for new homes in Loudoun County, seeing as inventory has been shrinking over the past few months.
With both home sales and prices up at the close of the second quarter in 2012, Loudoun County is still showing clear signs of continuous health and growth in its local housing market. Home sale volume went up by 28% compared with the first two quarters of 2011, according to The Loudoun Newsletter, as well as Loudoun County home prices and home values being on the upswing. Record-low mortgage rates could, in part, be an explanation for why prospective buyers have returned to the market and are purchasing Ashburn and Leesburg new homes for sale.
The recovery seen in the Loudoun County housing market reflects positive trends that are happening across the country. According to the National Association of Realtors (NAR), the second quarter showed that home prices rose in metropolitan areas, with the median existing single-family home prices rising in 110 out of 147 metropolitan statistical areas (MSAs) based on closings in the second quarter in comparison with the same quarter in 2011.
“It’s most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners, says NAR chief economist, Lawrence Yun. “Some of the improvement in prices is due to a smaller share of sales in low price ranges where inventory is tight.” Yun goes on to say that he expects home prices to continue to increase in even more markets during upcoming quarters.