Construction of new homes increased 12 percent in the month of December to a seasonally adjusted annual rate of 954,000 units, according to Commerce Department data released today.
Activity has increased 37 percent across the nation since December 2011 and, according to the National Association of Home Builders, is now at its highest level since June of 2008. The industry group hailed the latest report as indication the housing recovery is well underway. “With inventories of new homes at razor thin levels, builders are moving prudently to break ground on new construction ahead of the spring buying season to meet increasing demand,” Barry Rutenberg, chair of the NAHB, said in a statement.
The number of building permits issued – a predictor of real estate market trends – rose 0.3 percent in the month of December and 29 percent year-over-year to a seasonally adjusted annual rate of 903,000. Construction rose 8 percent for single-family homes, and 23 percent for buildings of five of more units.
The data also points to significant regional differences in real estate market trends. The biggest monthly gains in building activity took place in the Midwest where total housing starts increased by nearly 25 percent. Activity rose more than 21 percent in the Northeast, nearly 19 percent in the West and under 4 percent in the South. Year-over-year, the West saw a more than 57 percent increase in new construction, while the South experienced a 43 percent gain and the Northeast, a 37 percent gain.
“Overall, this report represents a solid ending to 2012 and a promising start to 2013,” Robert Denk, senior economist at the NAHB, said in a statement assessing the real estate market trends. “Multi-family production is almost back to normal levels and while single-family starts still have a way to go, they are gaining momentum. This trend could be even stronger if not for persistently tight credit conditions for home buyers, flawed appraisal values and uncertainties regarding economic policy debates in Washington.”
Yesterday, the NAHB reported that economic and political uncertainty had put a damper on builders’ confidence as measured by the association’s Housing Market Index. Following an eight-month rally, the index remained unchanged at 47 in January – three points below the break-even point of 50 where equal numbers of builders view real estate market trends as positive or negative.