The US Census Bureau and the Department of Housing and Urban Development tell us that new construction of residential homes jumped +5.7% in April 2019 compared to the prior month of March. Despite that jump, construction starts were down -2.5% y/y.

According to John Pataky, TIAA Bank’s executive vice president, “A strong spring home buying season seems to have pulled the housing market out of its slump of the past couple of months. Wage growth has been solid and relatively placid markets during April likely made consumers more confident in their finances. Furthermore, there has been an unseasonable dip in lumber prices (plus Trump just recently ended tariffs with Mexico and Canada) which has provided downward pressure on input costs in this important time for the market.”

Even with this increase in construction starts and an increase of +0.6% in building permits, we’re getting mixed messages from industry insiders.

The housing market is definitely struggling to meet demand due to low inventory and growing home values across the country. “The for-sale housing market is continuing to cool as builders of single-family homes pull back from the market,” said Trulia’s chief economist Issi Rommam. “Earlier, this tendency was concentrated in those West Coast markets which have cooled the most, but it now appears to have spread to the South as well, where the bulk of new US housing is produced.

One new app that may ease the cost of custom new construction is the digital home designer Higharc currently being used in Chapel Hill NC. Higharc lets buyers customize their own home with an algorithm, not an architect, so they can three-dimensionally design their house.

Users first complete a short survey that indicates their budget, location and lifestyle wants/needs and then they drop and drag rooms, windows and kitchen layouts. Each alteration to the app within the algorithm comes with a budget update. The software abides by the International Code Council and uses public data to integrate with specific lot details and terrain information.

Buyers must first own their lot to use the software and then go through standard municipal processes while their plans are handed off to builders for approval and construction.

No matter the apps and algorithms available, the fact that new construction and building permits are up is positive news for the housing industry. Let’s hope that some of that new construction is directed towards lower tiered markets where inventory is the lowest and demand the highest.

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