New Home Construction Making a Comeback

January 22, 2012

Nationwide housing starts fell from November to December, even though builders started construction on more single-family homes last month than they have in nearly two years, especially in the Chicago real estate market’s region.

According to recently released data from the Census Bureau, the construction of new single-family homes in December rose 4.4 percent to a seasonally adjusted annual rate of 470,000 units in December. That’s the third straight monthly increase and the fastest pace of single-family housing starts since April of 2010.

But the overall number of housing starts last month fell 4.1 percent to a 657,000-unit rate due to a 20.4 percent dip in the multifamily building sector.

For all of 2011, overall housing starts hit 606,900 units, which was 3.4 percent better than the overall production in 2010.

“This report is in keeping with our expectations for slow but steady improvement in the single-family market, where production hit its lowest yearly rate in over 50 years in 2011,” said David Crowe, National Association of Home Builders (NAHB) Chief Economist David Crowe.

“Meanwhile, it should be noted that the decline in multifamily starts in December was coming off a dramatic increase from the previous month and simply brought that sector back closer to trend. Apartment production generally continues to gain strength heading into 2012 after posting a more-than 50 percent gain in 2011.”

Regionally, housing starts in the Midwest, which saw a big decline in November, surged a whopping 54.8 percent in December. The Northeast also rose after a down month, up 41.2 percent. The South and West had drops in production of 3.0 percent and 17.6 percent, respectively.

Permit issuance, which can determine future activity, rose 1.8 percent for single-family construction but fell 3.7 percent for multifamily permits.

Once again, the Midwest lead the pack, with permit issuance rising 5.8 percent last month. The West remained unchanged, while the Northeast and the South fell 6.5 percent and 0.6 percent, respectively.

Housing permits for all of 2011 rose 1.2 percent compared to 2010.

“Today’s report adds to the growing evidence that demand for new, single-family homes is finally starting to firm up in an increasing number of markets nationwide,” said Bob Nielsen, NAHB chairman.

“This emerging trend is allowing builders to put more crews back to work, and could be even stronger if not for the overly tight credit conditions that prevail for both builders and buyers, as well as the continuing foreclosure crisis and the challenges of obtaining accurate appraisal values on new homes. Policymakers should be doing everything possible to alleviate these problems and nurture the fledgling housing recovery in order to promote job and economic growth.”

Categories: Economy, New Homes

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