Apr
19

New-Home Construction on the Rise

April 19, 2011

Yesterday, builder confidence in the market for new-home construction went down, but today, a report on housing starts shows that production is actually going up.

According to the U.S. Commerce Department, builders broke ground on more new homes in March than they have in the last six months.

New-home construction starts throughout the country rose 7.2 percent last month. That includes a 7.7 percent increase in the construction of single-family homes and a 14.7 percent rise in the building of apartment and condominium buildings.

The increase in new-home construction was felt in three out of four regions and the most in the Midwest, where it rose 32.3 percent last month.

In addition, to show that there is hope for the future, building permits increased 11.2 percent in March to the highest level since December. That includes a 28 percent spur in permits granted for the construction of apartment and condo buildings.

New homes generally take six months to build, so building permits are a good indicator of what the future holds.

OK, so far, good news, however, there is another side. While the amount of new homes completed in March rose from February, the numbers are still at their lowest level since 1968, while the amount of homes now under construction sit at a four-decade low.

So, that’s why yesterday’s builder confidence in the market for new, single-family homes fell from 17 to 16 on April’s National Association of Home Builders/Wells Fargo Housing Market Index.

Wonder if that number would increase if those home builders saw today’s U.S. Commerce report.

“While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging,” said Bob Nielsen, chairman of the National Association of Home Builders (NAHB).

“It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery.”

Categories: Economy, Featured

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Tracey

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