Monday, December 9, 2013
The Associated Press
WASHINGTON — U.S. home construction is making a comeback that could invigorate the economy's still-weak recovery.
New homes are under construction in Edmond, Okla., recently. U.S. builders started construction on single-family homes and apartments in September at the fastest rate since July 2008.
Builders last month started construction on single-family houses and apartments at the fastest rate in more than four years, the Commerce Department said Wednesday. And they laid plans to build homes at an even faster pace in coming months — a signal of their confidence that the housing rebound will last.
The pace of construction has grown steadily in the past year, and analysts expect it to keep rising. The increase has been fueled by record-low mortgage rates, more stable home prices and a shortage of previously occupied homes for sale.
More new homes could accelerate growth and help boost hiring, especially in areas like construction, home improvement and retailing. More homeowners lead to more people buying home furnishings.
"I don't have that crystal ball, but I will say we're seeing the best sales we've seen in five years, and it sure feels good," Douglas Yearley, CEO of Toll Brothers Inc., said in an interview with The Associated Press. Toll builds luxury homes in 20 states.
The government's report Wednesday on home construction in September was filled with encouraging details.
Overall, the number of homes that were started increased 15 percent from August to a seasonally adjusted annual rate of 872,000. That's the fastest rate since July 2008.
Single-family homes, which made up more than two-thirds of the new construction, rose 11 percent to 603,000. That was also the quickest rate in four years. Apartment construction, which can be more volatile from month to month, rose 25.1 percent.
And applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, another high point since July 2008.
The rate of new construction has surged more than 38 percent in the past 12 months.
Housing starts are now 82.5 percent above the annual rate of 478,000 in April 2009, the recession low. It's still well short of the 1.5 million annual rate that economists consider healthy. And it's far below the more than 2 million homes started in 2007 — the peak of the boom. But the steady upward trend appears likely to endure, analysts say.
"The housing market is improving, and there is no reason to think that this will not continue going forward," said Patrick Newport, U.S. economist at HIS Global Insight.
The surprisingly robust construction data helped push stocks modestly higher. And the prices of homebuilder stocks rose sharply.
The report came a day after the National Association of Home Builders said confidence among builders had reached a six-year high. The group's index has been rising over the past year.
Home buying is likely to expand now that the Federal Reserve is buying mortgage bonds to try to push record-low long-term mortgage rates even lower.
Newport said housing starts should climb to 950,000 next year and to 1.27 million in 2014. By 2015, he said construction should exceed 1.5 million.
Newport also predicts that housing will add about 0.25 percentage point to overall economic growth this year. If that forecast proves accurate, it would be the first year that housing has been a positive factor for economic growth in five years.
"The rest of the economy is still struggling, but housing is doing better because as the population grows, we need new houses to meet that demand," Newport said.
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