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Data: Census Bureau; Chart: Axios Visuals

The number of new homes under construction has soared — to levels not seen since the housing market crash 14 years ago.

Why it matters: Home prices have been surging as the demand for houses has outpaced supply. Homebuilders are doing what they can to keep up, but supply chain bottlenecks have led some to turn away buyers as they try to catch up.

Driving the news: There were 689,000 single-family homes under construction in July, the highest number since July 2007.

  • "This is clearly a positive sign given the remarkably low levels of inventory on the market," Mortgage Bankers Association chief economist Mike Fratantoni says.

Yes, but: While the large number likely means more new homebuyers will soon be able to move in, it may also reflect the fact that it’s taking increasingly longer to complete a home.

  • "I expect there have been delays in construction, and that is why there are so many ‘under construction,'" Bill McBride, housing economist at Calculated Risk, tells Axios.
  • "The lack of building materials, ready-to-build on lots, and labor shortages are slowing housing growth," Ali Wolf, chief economist at Zonda Economics, tells Axios.
  • This explains why the number of homes under construction is up even as the pace of housing starts slows.

State of play: As of June, new homes were being sold at an annualized rate of 676,000, a number that’s come down from a high of 993,000 in January due to supply constraints.

  • An unusually high 76.6% of new homes sold were either still under construction or not yet started.
  • While the supply of new homes has been ticking higher, completed homes represented a record low 10.2% of this supply.

The big picture: It may be tempting to draw comparisons to the housing bubble, but that may be a mistake.

  • "Builders adjust their sales strategy depending on where the market is," Wolf explains. "For example, during the mid-2000s housing boom, builders started a lot of speculative building to get ahead of the demand."
  • "Following the crash, builders pivoted more towards a built-to-order model where they would wait for a buyer to start most of their homes," she says. "The high number of homes under construction is partly telling us that builders are building homes that they already have under contract."

The bottom line: While the elevated level of construction raises warning flags, evidence suggests it is more reflective of delays than frenzied speculative building.

  • "Since most of these are already sold, I don't think we are overbuilding, or that this will impact prices," McBride says.

Go deeper

Updated Nov 25, 2021 - Economy & Business

How America's turkey supply chain brings birds to your table

A turkey farm in Pennsylvania. Photo: Hannah Beier/Bloomberg via Getty Images

The route that your turkey took on its way to your table this year was beset by extreme weather, global supply-chain issues and labor shortages — many of the same factors contributing to the "Everything Shortage."

The big picture: Our Axios Local teams have turned their eye to each piece of the turkey supply chain — from Iowa, one of the top producers of animal feed nationwide; to Minnesota, the biggest turkey producer; to Arkansas, home of Walmart, the country's largest retailer.

Nathan Bomey, author of Closer
2 hours ago - Economy & Business

Tesla delays Cybertruck until 2023

Tesla debuts the Cybertruck in Hawthorne, Calif., on Nov. 21, 2019. Photo: Frederic J. Brown/AFP via Getty Images

Tesla is at risk of falling behind on one of the most critical products in the American auto industry: pickups.

Why it matters: Pickups are the most profitable segment in the business and account for the first, second and third best-selling vehicles in the country. Without a serious pickup strategy, Tesla could miss out on a huge source of future income.

Defense taking steps to mitigate civilian harm after botched airstrikes

Secretary of Defense Lloyd Austin speaks during a news conference at the Pentagon in Arlington, Virginia on Sept. 1, 2021. Photo: Andrew Harrer/Bloomberg via Getty Images

Defense Secretary Lloyd Austin issued a directive Thursday to improve the U.S. military's approach to civilian harm mitigation and response, calling it a "strategic and a moral imperative."

Why it matters: The Pentagon has faced criticism for years for amassing civilian casualties in its missions, especially in the Middle East. New York Times investigations have found systemic failures in efforts to prevent civilian deaths, as well as a cover-up of a 2019 airstrike that killed dozens of women and children in Syria.