New-Home Construction Bounces Back, Soars 9.3%
New-home construction and building permits — a future gauge of construction — surged last month, slowly helping to pull the new-home market out of one of its worst years for home building.
Builders broke ground on more homes in November, a 9.3 percent increase over October, reaching the highest level since April 2010, the Commerce Department reported Tuesday. Year-over-year, new-home starts were up 24.3 percent in November.
Home construction increased to a seasonally adjusted annual rate of 685,000 homes in November. However, while it’s an improvement, the rate is still below the 1.2 million home pace that economists consider healthy for the new-home sector.
November’s increase was mostly driven by construction of multi-family homes with at least two units, which soared 25.3 percent in November. Construction of single-family homes increased 2.3 percent for the month.
Building permits jumped 5.7 percent in November, the highest increase since March 2010, with the increase mostly driven by apartment construction permits.
Builders Feeling More Confident
Meanwhile, for the third consecutive month, builder confidence in the new-home market continued to edge up, according to the National Association of Home Builders/Wells Fargo Housing Market Index for December. The index is at its highest point since May 2010.
While the index reached 21 in December, it is still far below 50, a reading which indicates more builders view conditions as good rather than poor. The index hasn’t reached that point since the housing boom in April 2006.
“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” Bob Nielsen, chairman of the National Association of Home Builders, said in a statement. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”
Source: “Apartment Construction Spurs 9.3% Jump in Housing Starts, But Level Remains Low,” Associated Press (Dec. 20, 2011); “U.S. Nov. Housing Starts +9.3% to 685K; Consensus +0.3%,” Dow Jones International News (Dec. 20, 2011); and National Association of Home Builders
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Construction Up Along With Builder Confidence
Construction of new homes rose to an annual rate of 591,000 in January, up 2.8 percent from December when the revised rate was 575,000, the Commerce Department announced Wednesday.
Meanwhile, the monthly home builder confidence scale rose two points in February to 17.
The National Association of Home Builders Chair Bob Jones said, “Builders are slightly more optimistic that the housing recovery is finally beginning to take root.”
Builder confidence was highest in the Northeast and the South, weaker in the West and lowest in the Midwest.
Source: The Wall Street Journal, Meena Thiruvengadam (02/16/2010) and CNN, Blake Ellis (02/17/2010)
Report: New-Home Construction Increasing
Despite high unemployment and general concerns of too much existing inventory, new-home construction appears to be rising.
According to Friday’s report from the U.S. Commerce Department, construction of new homes rose 3.6 percent in June compared to May. Building permits climbed 8.7 percent, and single-family home starts jumped 14.4 percent to 470,000, after rising 5.9 percent in May.
In real numbers, ground was broken for an estimated 58,300 houses nationwide in June, and an estimated 58,400 building permits were issued.
Here’s a look at housing starts in different U.S. regions:
* Midwest: up 33.3 percent
* Northeast: up 28.6 percent
* South: down 1.4 percent
* West: down 14.8 percent
Source: The Wall Street Journal, Jeff Bater (07/17/2009)
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