New Construction Gets Boost from Renters

December 20, 2011

The fact that less people are buying houses actually helped the new-home market last month.

The production of new single-family and multifamily homes jumped 9.3 percent in November, according to figures released by the U.S. Commerce Department on Tuesday.

apartment building under constructionThe improvement, which marked the fastest pace of housing starts since October of 2008, included an increase of 2.3 percent in single-family home starts to 447,000 units; its fastest rate since June of 2011.

But, it is the surge of people choosing to rent that pushed the numbers up high, as the production of new apartment buildings jumped 25.3 percent to a 238,000-unit pace in November; its fastest rate since September of 2008.

“While we still have a long way to go back to normal, the latest numbers are one more indication that housing is slowly turning the corner,” said Bob Nielsen, chairman of the National Association of Home Builders.

“In scattered markets across the country, buyers who have long sat on the sidelines are starting to take advantage of today’s very attractive prices and interest rates, while others are making the move to a new apartment.”

Unfortunately, the Chicago real estate market and its region cannot enjoy the new-home market improvement as much as the rest of the country. While combined housing starts were up 53.8 percent in the Northeast, 22.6 percent in the West and 4.1 percent in the South, the Midwest actually posted an 18.2 percent decline.

But there is always hope for the the future. The issuance of building permits, which can predict future building activity, rose 5.7 percent to a seasonally adjusted annual rate of 681,000 units in November; the best pace since March of 2010. That includes an increase of 1.6 percent for single-family permits and a surge of 13.9 percent for multifamily permits.

“Along with recent gains that have been registered in builder confidence and other economic measures, the improvement in new-home production and permitting shown in this latest report provides further evidence of the gradual strengthening that we expected to see in housing markets toward the end of the year,” said David Crowe, chief economist of the National Association of Home Builders.

“We anticipate continued, slow improvement in housing starts and sales through 2012.”

Categories: Economy, New Homes

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