The number of new homesunder construction has soared — to levels not seen since the housing market crash 14 years ago.

Why it matters: Home prices have been surging as the demand for houses has outpaced supply. Homebuilders are doing what they can to keep up, but supply chain bottlenecks have led some to turn away buyers as they try to catch up.

Driving the news: There were 689,000 single-family homes under construction in July, the highest number since July 2007.

• "This is clearly a positive sign given the remarkably low levels of inventory on the market," Mortgage Bankers Association chief economist Mike Fratantoni says.

Yes, but: While the large number likely means more new homebuyers will soon be able to move in, it may also reflect the fact that it’s taking increasingly longer to complete a home.

• "I expect there have been delays in construction, and that is why there are so many ‘under construction,'" Bill McBride, housing economist at Calculated Risk, tells Axios.
• "The lack of building materials, ready-to-build on lots, and labor shortages are slowing housing growth," Ali Wolf, chief economist at Zonda Economics, tells Axios.
• This explains why the number of homes under construction is up even as the pace of housing starts slows.

State of play: As of June, new homes were being sold at an annualized rate of 676,000, a number that’s come down from a high of 993,000 in January due to supply constraints.

• An unusually high 76.6% of new homes sold were either still under construction or not yet started.
• While the supply of new homes has been ticking higher, completed homes represented a record low 10.2% of this supply.

The big picture: It may be tempting to draw comparisons to the housing bubble, but that may be a mistake.

• "Builders adjust their sales strategy depending on where the market is," Wolf explains. "For example, during the mid-2000s housing boom, builders started a lot of speculative building to get ahead of the demand."
• "Following the crash, builders pivoted more towards a built-to-order model where they would wait for a buyer to start most of their homes," she says. "The high number of homes under construction is partly telling us that builders are building homes that they already have under contract."

The bottom line: While the elevated level of construction raises warning flags, evidence suggests it is more reflective of delays than frenzied speculative building.

• "Since most of these are already sold, I don't think we are overbuilding, or that this will impact prices," McBride says.