The recovery of the new-home market
picked up speed in August, with builders beginning construction on more
single-family homes and building permits soaring to a five-year high,
the Commerce Department reported Wednesday.
Construction starts on single-family homes rose 7 percent in August,
reaching its highest point in six months, according to the Commerce
Department.
“Home building seems to be holding up decently in the higher mortgage
rate environment, probably due to the support of strong underlying
fundamentals: thin inventories and steady household formation,” says
economist Guy Berger.
Single-family housing starts rose across the country, with the West
seeing the biggest gain: 17.5 percent. They increased by 9.6 percent in
the Northeast, 7.1 percent in the Midwest, and 2.3 percent in the
South.
"This is the kind of signal we've been looking for, with
single-family starts and permits up or holding steady across every
region in the nation," says David Crowe, chief economist for the
National Association of Home Builders. "Today's report is reflective of
gradual improvement in buyer confidence in the overall market and our
recent surveys that indicate a solid outlook for single-family
production. On the multifamily side, we are catching up with underlying
rental demand. We expect to see additional multifamily starts in the
future, but not as rapid a pace of growth as we've seen in the past."
In August, starts within the multi-family market — which includes the
volatile apartment and condo sector — dropped 11.1 percent. Higher
mortgage rates could be making developers in the multifamily sector more
cautious about starting new projects, Reuters reports.
Meanwhile, the gains are expected to continue for the single-family
housing market. Building permits for single-family homes, a gauge for
future construction, rose 3 percent in August to its highest level since
May 2008. Building permits for multifamily homes plummeted 15.7 percent
in August.
Source: National Association of Home Builders and “Home Construction Rises, as Do Building Permits,” Reuters (Sept. 18, 2013)