New residential construction exploded in July, with $711 million of new construction starts in Lake, Orange, Osceola and Seminole counties last month, according to Hamilton, New Jersey-based Dodge Data & Analytics. Residential starts were up 22% from July 2019.
It’s a continued reversal of fortune for homebuilders, as June was the first month since the start of the pandemic that new housing construction did not decrease year over year. That’s not true for new nonresidential construction, which was down 45% from last July.
It’s also a sign that the construction industry is trying to keep up with skyrocketing home demand in Central Florida. Local home sales jumped more than 18% from June to July, according to the Orlando Regional Realtor Association.
What’s more, the outlook remains bright for homebuilders, Greater Orlando Builders Association CEO Chassity Vega previously told Orlando Business Journal. That’s because Orange County government took a number of actions in July that will help the industry. Those measures include a temporary fix to the county’s school capacity enhancement agreement issue that kept 18 housing developments from getting approved, as well as Orange County's decision to pause some building permit fees for six months and defer some impact fee payments.
Among the factors driving home demand for Orlando homes are low interest rates and a migration of buyers from the Northeast and South Florida to the Orlando area. At the same time, Orlando’s rental market is tight, with an average 8.3% vacancy rate, according to CoStar Group Inc. (Nasdaq: CSGP) research.
New home construction is important locally because it creates jobs and subcontractor opportunities. The industry is even more important in Central Florida given the toll the pandemic has taken on the tourism sector, Vega said. “It is construction that’s going to pull us out of these hard economic times.”
Plus, every home sale in the state has an estimated local economic impact of $77,858, according to a 2018 study by the National Association of Realtors. Further, the housing market often is considered a reflection of the overall health of the local economy.
High demand caused Orlando home sales to surge in July as the housing supply dwindled. There were 3,679 homes sold in the region last month, up 1.4% from the 3,628 homes sold in July 2019 and an 18.6% spike from the 3,103 sold in June, according to the Orlando Regional Realtor Association.
Prices were also on the rise. The median home sales price was $270,000, up 9.2% from the July 2019 median price of $247,250 and up 1.9% from $265,000 in June. Home demand in the region far exceeds the number of available properties, said Reese Stewart, the president of the Realtor association’s board of directors.