Categorized | Residential

Housing Starts Fall 8.5% in New Year: Analyst Disappointed, but Expected During Winter

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New Home Construction Rebound

Home building fell in January after surging 15.7% the month before, even though the new permits for construction rose to third-highest since 2008. This disappointed many analysts who were expecting January to be evidence of a housing market rebound.

The Commerce Department said on Wednesday that building starts at sites for homes fell 8.5 percent last month to a 890,000-unit annual rate. Mostly due to a sharp decline in the multi-family unit category, which fell 24.1 percent.

Starts for single-family units, which makes up two thirds of the total, went up a whopping 0.8 percent to their highest level since July 2008.

Meanwhile, Permits for future home construction rose to a 925,000-unit rate, the quickest since June 2008. If this continues to rise, it will be the most home-building year in quite some time.

The National Association of Home Builders said Tuesday that confidence among U.S. homebuilders slipped in February from a 6 1/2-year high in January. Many builders reported less traffic by prospective customers before the critical spring home-buying season begins.

“Following solid gains over the past year, builder confidence has essentially leveled out and held in the same three-point range over the last four months,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “This is partly due to ongoing uncertainties about job growth and consumer access to mortgage credit, but it’s also a reflection of the fact that builders are now confronting rising costs for building materials and, in some markets, limited availability of labor and lots as demand for new homes strengthens.”

“Having risen strongly in 2012, the HMI hit a slight pause in the beginning of this year as builders adjusted their expectations to reflect the pace at which consumers are moving forward on new-home purchases,” observed NAHB Chief Economist David Crowe. “The index remains near its highest level since May of 2006, and we expect home building to continue on a modest rising trajectory this year.”

The housing market is on a very slow pace to a rebound, reports USA Today. Saying, “The U.S. housing market is slowly recovering after five years of markedly sub-par performance that followed the collapse of the residential real estate bubble in 2007. Ultra-low borrowing rates and the Federal Reserve’s aggressive bond-buying program aimed at stimulating job growth in the economy have helped the housing market to rebound.”

A good sign for an improving market is foreclosures. Foreclosures are slowly down on a national basis.

Even though new homes only make up a small percentage of the housing market, they still make an impact on the economy. According to statistics from the home builders, each new home built creates an average of three jobs for a year and generates about $90,000 in tax revenue.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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