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Building permits hit eight-year high

Posted on Thursday, June 18, 2015 at 10:43:38 AM

Though new housing starts fell in May, building permits hit an eight-year high, which bodes well for a market with a short inventory. 

Building permits rose 11.8 percent to an annualized pace of 1.1 million in May, according to Business Insider. This could presage a jump in inventory in the coming months as homebuilders begin breaking ground on new houses, after starts in May were relatively slow. Housing starts dropped 11.1 percent to an annualized pace of 1.04 million. 

Jonathan Smoke, Realtor.com chief economist, explained to the news source in an email that the increase in building permits is consistent with recent price increases as well as robust demand in the housing market. By seeking residential financing and signing a contract on a home yet to be built, he noted that people can avoid having to outbid others. 

With builder confidence high and the pace of permits higher than it has been in eight years, the gradual housing recovery looks like it is picking up steam. In fact, the NAHB found that homebuilder sentiment is at its highest level seen since 2005.