In August, the real estate market saw a significant uptick in new home construction, with housing starts increasing by 9.6%, according to KPMG’s latest research. Completed home construction hit 1.79 million units, marking the highest level since January 2007. This shift reverses a recent trend where builders focused more on completing existing projects rather than starting new ones. Here’s a breakdown of the key insights from August’s construction data:
Key Highlights in August New Construction
- Single-Family Home Starts Soar: Single-family housing starts jumped by an impressive 15.8%, reaching just under one million units. This is great news for potential buyers in Los Angeles seeking more home options in areas like Beverly Hills, Brentwood, and Pacific Palisades.
- Multifamily Construction Declines: Starts for multifamily buildings with five or more units dropped by 6.7% month-over-month and 6.2% year-over-year. Builders have pivoted away from multifamily construction after a record one million multifamily units were under construction in 2023.
- Building Permits Signal Future Growth: Building permits rose 4.9% in August, indicating a healthy pipeline of future construction. Single-family permits increased by 2.8%, while permits for multifamily buildings with five or more units surged by 8.4%.
What This Means for Los Angeles Homebuyers and Investors
This uptick in construction, especially for single-family homes, presents opportunities for buyers in Los Angeles. With more new homes expected to enter the market, areas like Westwood, Sherman Oaks, and Venice Beach may see an increase in listings. Builders are ramping up efforts, and with mortgage rates starting to fall, new home developments are once again becoming more attractive to buyers and investors alike.
For buyers interested in multifamily properties in Los Angeles, the slowdown in construction means that demand could exceed supply in the coming years. Areas like Downtown LA and Koreatown, known for high-density housing, may experience tighter inventory, pushing rental prices upward.
Builder Incentives and Market Outlook for Los Angeles
Even as construction picks up, many builders are expected to offer buyer incentives such as rate buydowns to help reduce mortgage costs. With the “lock-in” effect weakening—where homeowners are reluctant to move due to locked-in low mortgage rates—there’s potential for more properties to hit the market in 2025.
Looking ahead, residential investment is anticipated to boost economic growth starting in early 2025. As mortgage rates continue to decline and new construction projects ramp up, we foresee a more vibrant Los Angeles real estate market, with increased buyer interest and more listings in desirable neighborhoods like Hollywood Hills and Marina del Rey.
Why Now Could Be a Great Time to Explore New Homes in Los Angeles
With new home construction on the rise and future development projects in the pipeline, now could be an ideal time for both first-time homebuyers and real estate investors in Los Angeles to take advantage of the growing inventory. Whether you’re looking for a luxury home in the Hollywood Hills or a family-friendly property in the San Fernando Valley, the increase in housing starts offers more choices.
Contact Abdo Pierre Faissal at Nourmand & Associates for more information 310-620-1038 / [email protected]