WASHINGTON (MarketWatch) – Construction on new U.S. homes in June rose 6.9% to an annual rate of 760,000, the highest level since October 2008, but building permits fell slightly, the Commerce Department reported Wednesday. Housing starts in May were revised up to 711,000 from an original reading of 708,000. Economists surveyed by MarketWatch had expected housing starts to rise in June to an annual rate of 750,000 on a seasonally adjusted basis. Permits for new construction, viewed as a gauge of future demand, edged 3.7% lower to an annual rate of 755,000 from 784,000 in May. Permits for single-family homes, which account for three-quarters of the housing market, rose a scant 0.6% to an annual rate of 493,000 last month. More than half of the increase in housing starts in June involved buildings with five or more units.
Posts Tagged Housing starts
The long-battered housing market is finally starting to get back on its feet. But some experts believe it could soon become another housing boom.
Signs of recovery have been evident in the recent pick ups in home prices, home sales and construction. Foreclosures are also down and the Federal Reserve has acted to push mortgage rates near record lows.
But while many economists believe this emerging housing recovery will produce only slow and modest improvement in home prices, construction and jobs, others believe the rebound will be much stronger.
Barclays Capital put out a report recently forecasting that home prices, which fell by more than a third after the housing bubble burst in 2007, could be back to peak levels as soon as 2015.
“In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts,” said Stephen Kim, an analyst with Barclays, in a note to clients.
In addition to what Kim sees as a big rebound in building, he’s bullish on home prices, expecting rises of 5% to 7.5% a year.
Construction is expected to be even stronger, with numerous experts forecasting home construction to grow by at least 20% a year for each of the next two years. Some believe building could be back near the pre-bubble average of about 1.5 million new homes a year by 2016, about double the 750,000 homes expected this year.
“We think the recovery is for real this time around,” said Rick Palacios, senior analyst with John Burns Real Estate Consulting. “If you look across the U.S. economy right now, there are only a handful of industries looking at 20-30% growth over the next 4-5 years, and housing is one of those.”
“That turn in the [housing] market is occurring now and it should become a boom by 2015. It will be powerful enough … to lift the entire U.S. economy,” said Roger Altman, chairman of Evercore Partners and former deputy Treasury secretary, in a column for the Financial Times.
Altman said he expects housing will add 4 million jobs to the economy over the next five years, as pent-up demand for home purchases drives building and and home prices higher.
Some Americans are still jittery over the housing market, but here are eight positive signs that should quell some of their fears.
- Housing prices are on the rise across the country.
- Foreclosures have slowed. Analysts suggest that as the supply of distressed homes slows, buyers will be forced into higher-price properties too.
- Inventories of for-sale homes on the market are decreasing. In fact, inventories of for-sale homes have dropped 24 percent from a year ago.
- Mortgage rates are at ultra record level lows, for those who can qualify
- Housing starts rose 6.9 percent in June. Also, existing-home sales were up 4.5 percent higher in June compared to one year ago.
- Home building stocks are on the rise.
- For investors who are buying homes, rents are soaring, allowing them to cash in on their investments. Rental prices are at a 10-year high as median units rent for $710 a month.
- Home affordability is at record highs for the median income family, due to falling home values and super low mortgage rates. In fact, a recent study found that it is cheaper to buy a home than rent in basically ever major city in the U.S. For those who buy, you can save the cost of renting by owning the home for five years or less.
But while the signs point to a housing market on the mend, some Americans still remain hesitant. Many Americans are still underwater on their mortgage, owing more on their home than it is currently worth. Also, the economy continues to weigh on the recovery, particularly a dampening employment outlook, which analysts see as tied to housing.
Still, The Wall Street Journal concludes in a recent article that if you take into account all the positive signs lately in the housing market, “housing presents an attractive long-term investment that should hold steady or even have upside surprise in the short term.”
By Jeffry Bartash
WASHINGTON — Construction on new US homes rose 2.6 percent in April to an annual rate of 717,000 units, while building permits fell seven percent to 715,000 — one month after reaching a near four-year high, the government reported Wednesday.
Economists surveyed by MarketWatch expected housing starts in April to rise to a total 690,000 on a seasonally-adjusted basis. Housing starts in March were revised up sharply to 699,000 from 654,000, while permits were revised up to 769,000 — the highest level since September 2008 — from an original reading of 747,000.
In April, permits for single-family homes, which account for three-quarters of the housing market, edged up 1.9 percent to an annual rate of 475,000. Permits for new construction are viewed as a gauge of future demand.
Apartments lead September gain; single-family starts rise 1.7%
By Steve Goldstein,
WASHINGTON (MarketWatch) — Housing starts surged 15% in
September to the highest level in 17 months, according to government data
released Wednesday, as increased demand for rental stock as well as rebuilding
after Hurricane Irene contributed to the upturn.
The Commerce Department said starts rose to a seasonally adjusted annual rate
of 658,000, which also is 10.2% above the September 2010 reading and the best
level since April 2010 — the month the homebuyer tax credit expired. The figures
were well ahead of the 590,000 forecast in a MarketWatch-compiled economist
The rise was led by a 53% surge in starts of buildings with five or more
units to 227,000, the best reading in three years; single-family starts rose a
more modest 1.7% to 425,000, which is only a two-month high.
Rental demand is booming, as buyers struggle to get the credit needed to
purchase homes even with mortgage rates near record lows and as some show a
reluctance to re-enter the housing market over fears of declining prices.
“The big gain in multfamily is consistent with what we have seen in
construction spending and is leading the slow recovery in the construction
industry,” said Jed Kolko, chief economist of real estate web site Trulia.
“That’s in response to rising rents that show the relative tightness of the
The starts data can be highly volatile, with September’s data having a margin
of error of plus or minus 13.7%.
The less-volatile building permits figures declined 5% to 594,000, and
single-family permits eased 0.2%.
August’s reading on housing starts was revised modestly higher, to 572,000
from 571,000, and August’s reading on permits was revised higher to 625,000 from
an initial reading of 620,000.
In any case, the data still show that housing has a long way to go to recover
— at the peak, there were 2.07 million units started in 2005.
The glut of foreclosed and soon-to-be-foreclosed homes, the number of
underwater mortgage owners, high unemployment and tough credit standards all
have contributed to weakness in housing.
But data of late have shown signs of stabilization.
On Tuesday, home-building stocks rallied on the release of builders confidence data for
October that recovered to the highest level — a still-bleak 18 on a scale of
1-to-100 — since May 2010.
Builders extended gains Wednesday, with PulteGroup and D.R. Horton stronger in early action.
As with the home-builders sentiment data, the figures on housing starts were
led by activity in the West, where starts gained 18.1% to hit a three-year high.
In the South, the largest market for new homes, starts rose 15.7% to register
the best reading since April 2010.
However, both those markets were led by apartments; single-family starts
dropped 9.4% in the South and were flat in the West.
Trulia’s Kolko said what appears to be happening is that the hardest-hit
areas like California, Florida and Nevada are seeing shifts in demand to
apartments, because the vacant houses can’t be rented out.
“It requires management to have and maintain rental units, and a lot of
vacant stock is not where renters tend to live,” he said.
Separately, the Labor Department said consumer prices rose 0.3% in September.
// Steve Goldstein is MarketWatch’s Washington
By Jeffry Bartash
WASHINGTON (MarketWatch) – The start of construction on new U.S. homes rose 7.2% in March to an annual rate of 549,000, while permits rose 11.2%, the government reported Tuesday. Housing starts in February were revised up to 512,000 from an original reading of 479,000, according to Commerce Department data. Economists surveyed by MarketWatch had expected housing starts in March to climb to an annual rate of 520,000 on a seasonally adjusted basis. Permits for new construction, viewed as a gauge of future demand, increased to an annual rate of 594,000 from February’s upwardly revised level of 534,000. Permits for single-family homes, which account for three-quarters of the housing market, rose 5.7% to an annual rate of 405,000 last month.
TMN Note – I don’t believe the Vail Valley has participated in this increase in housing starts but it is good news for the economy in general. As we continue to get good economic news, our reluctant buyers may start to commit to purchases in the Valley.