The annual inflation rate accelerated to 7.9% in February, the highest level seen since the 1980s, according to the Labor Department’s Bureau of Labor Statistics. New and existing home construction experienced increases across the board in February despite rising inflation.
Single-family housing activity increased nearly 5% year over year. Although new construction rose in February, the housing market faces persistent challenges, including increasing material costs, labor shortages, and supply-chain constraints. This was seen in waning consumer confidence by homebuilders amid these new realities.
Existing housing activity also experienced healthy growth. Remodel volumes rebounded in February following six consecutive months of year-over-year declines. The uptick could be driven, in part, by homeowners prepping their homes for sale before the spring and summer homebuying season is underway. After decreasing in January, home seller confidence also rebounded in February, according to Fannie Mae’s Home Purchase Sentiment Index.
While new and existing home construction improved in February, the housing market outlook remains uncertain. The coming weeks and months should provide greater insight into how homeowners and prospective homeowners may react to additional economic uncertainty stemming from recent geopolitical events.
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