Housing Starts Surge and Builder Confidence Increases in May

In May 2023, there was an impressive 8.5% month-over-month increase in single-family housing starts. However, compared to the previous year, there was a decline of 6.6%.

There is also good news regarding building permits, which saw a 4.8% month-over-month increase. This indicates positive prospects for future housing supply in the country. Builders are currently more confident about the housing market, as reflected in a 5-point month-over-month increase in builder sentiment. Their confidence stems from the improvement in the supply chain and the high demand for housing, despite elevated interest rates.

Builders are currently feeling extremely confident in housing demand and expect it to continue increasing, especially as interest rates start to decrease, whether that happens in 12 or 24 months.

Importance of Housing Starts and Builder Confidence

Why are these developments significant? Well, there is a severe shortage of 6 million homes across the country. With a median family income of $75,000 per year, there are only about 320,000 available homes.

Therefore, we require a substantial increase in housing supply, and the current trends are heading in the right direction. Although we are not yet at the same level as last year, we are making progress. Builder confidence is improving, which is crucial for achieving the necessary housing supply. Currently, the homeownership rate in the U.S. is at a 50-year low, and if we don't address the housing supply issue, this decline will continue.

One of the main challenges posed by the decline in homeownership is the loss of the wealth effect in the country. Homeownership is a significant contributor to building wealth, and homeowners have a net worth 40 times higher than renters. Therefore, increasing homeownership supply is essential for the financial well-being of middle-class and lower-income families.

In light of this, I urge you to appreciate and support your local builders. They play a crucial role in resolving the housing supply crisis we face, which ultimately protects our overall quality of life in the U.S. and specifically here in Huntsville, Alabama.

Posted by Matt Curtis on


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