Housing starts nationwide rose 5.9% for the month of July, according to an article released August 16 by the National Association of Home Builders (NAHB). Translating into a seasonally adjusted rate of 896,000 units, according to the US Census Bureau and HUD, this number means big things for custom homebuilders.

What does this mean for custom builders and buyers?

As the housing supply began to taper off earlier this summer, this number helps show that builders are properly reacting by rejuvenating the supply of new homes. When the housing bubble burst around the time of the recession, the construction of new homes came to a halt. Thanks to the saturated market, homebuyers were able to purchase homes at unusually low prices and builder suffered.

Now, we’re at the point where the ball is back in the builder’s court, homes have been selling fast, and even communities are selling out fast. As a builder, your biggest concern lately has been about buying more land; houses are designed and constructed easily enough, but it’s more of a question of where to put them.

The increase in housing starts for multifamily units can be explained by builders responding and reacting to the market demand; their goal is to keep up with each wave of buyers.

Rick Judson, NAHB chairman and a South Carolina homebuilder, said, “Builders are making every effort to keep up with the rising demand for new homes and apartments, and construction in both sectors is running well ahead of the pace we saw at this time last year.” He continued, “However, ongoing issues with accessing credit and limited supplies of finished lots and labor are making it tough to do that, particularly for single-family builders.”

The 6% July increase supports the idea that builders builders have been increasingly able to overcome the red tape Judson discussed.

“Today’s report is in line with our forecast for continued, gradual strengthening of housing starts and permit activity through the rest of the year,” explained NAHB Chief Economist David Crowe. He went on to say, “The double-digit bounce-back on the multifamily side was in keeping with typical month-to-month volatility in that sector while the sideways movement in single-family was a result of unusually wet weather in the South and West.”

A 26% gain put the market at a 305,000 unit pace on multifamily home construction, offsetting a previous dip in June; single-family housing units experienced a slight loss, declining by 2.2%.

Gains and losses for July were varied across the country. The Northeast gained 40.2%, while the Midwest rose 25.4%, and the West increased 7.2%. The South was the only region posting a decline, coming in with a 7% decline for the month of July.

The issuance of building permits also rose 2.7%, to an adjusted rate of 943,000. The issuance of building permits is typically an accurate indicator of future building activity, and it’s easy to see that builders are doing well. In order to maintain the high sales they’ve been benefitting from lately, builders should continue to keep building at a steady pace.

To learn more about this topic, start by referring to NAHB’s article here.