New Home Starts Reach Four Year High in October

New Home Start Four Year High
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New Home Start Four Year High

New construction in housing hit the strongest for two months starting in October since four years ago. The Commerce Department said on Tuesday housing starts increased 3.6 percent to a seasonally adjusted annual rate of 894,000 units, the highest it’s been since July 2008.

The biggest increase was from multi-family construction, which was up 11.9 percent. Single-family construction went down only 0.2 percent compared to September but was back up 35.3 percent from October 2011. Despite Hurricane Sandy hitting the east coast during this survey period, outcome was still good and the drive for the housing market is starting to boom.

“Single-family housing starts and permits were above expectations for October, suggesting more residential investment in the fourth quarter,” Macroeconomic Advisers analysts wrote in a research note.

The rise in starts was mostly apartment buildings, which were up by 10 per cent, while new houses held steady. Foreclosures may have pushed many people into renting rather than owning a home. This is leading to a surge in apartment rental. Higher rents are making it especially profitable to build new apartments.

David Crowe, National Association of Home Builders chief economist, said in a statement, “Today‚Äôs report bears out similar changes in other economic indicators that housing continues to recover at a slow but steady place, and is right in line with our expectations of modest month-to-month growth. However, we still have a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery.”

“The foundations for housing are getting better. Prices have stabilized, and people are feeling a bit more confident,” said Kevin Cummins, an economist at UBS Securities LLC in Stamford, Connecticut.

With all the reports of recovery numbers, this could mean the the US and world economy could start to build in 2013. From the report, it showed confidence among builders that has reached its highest level since the last days of the housing boom in 2006.

Eric Green, chief economist at TD Securities in New York said, “The broad improvement in home prices, home equity, starts, and inventory clearing are key developments that position the economy for stronger growth next year, and beyond.”

Housing Starts Highest in Four Years

New economic data today as October housing starts hit their highest rate in more than four years. This is very good news for the housing market, a segment of the economy that has continued to struggle since the recession. Reports indicate that for the first time since 2005, homebuilding is expected to add to gross domestic product.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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