New-Home Construction Hits Fastest Pace in 5 Years
Homebuilders are ramping up new-home construction at the fastest pace in more than five years, the Commerce Department reported Wednesday.
Construction of single-family homes and apartments in November rose to a seasonally adjusted annual rate of 1.09 million, a 23 percent increase over October’s pace. It marks the fastest pace since February 2008.
Broken out, housing starts on single-family homes surged nearly 21 percent in November, the fastest rate since December 2007. Apartment construction jumped 26 percent.
“Single-family and multifamily starts are at five-year highs, providing additional evidence that the recovery is here to stay,” says David Crowe, chief economist for the National Association of Home Builders. “We hit a soft spot this fall when interest rates jumped and the government closed down, but mortgage rates still remain very affordable and pent-up demand is helping to boost the housing market. We expect a continued steady, gradual growth in starts and home sales in 2014.”
Meanwhile, overall permits — a gauge for future building activity — dropped 3 percent in November, mostly attributed to the volatility in apartment construction, the Commerce Department reports. Permits for single-family homes rose 2.1 percent.
Regionally, home construction increased the most in the Midwest and South, rising 41.7 percent and 38.5 percent, respectively, in November. Home construction also ticked up by 8.8 percent in the West, but declined by 29.4 percent in the Northeast.
Housing inventories remain tight, with inventories of homes under construction hovering at a four-and-a-half-year low.