U.S. home construction surges in September
Data show new units hitting a four-year high, underscoring recovery
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — U.S. home builders broke new ground in September at the fastest pace in more than four years, data showed Wednesday, as building permits also rose sharply in the strongest sign yet that recovery in the construction trade is becoming firmly entrenched.Construction on new homes accelerated by 15% to an annual rate of 872,000 last month from a revised 758,000 in August, the Commerce Department said. The increase easily surpassed the 770,000 estimate of economists surveyed by MarketWatch.
Construction on multi-dwelling units such as condos and townhouses climbed an even faster 25%, but that’s a category that can swing sharply from month to month and is thus less an indicator of overall housing demand.
The number of permits requested, however, underscores the likelihood that the housing market’s recovery is finally for real after a nearly six-year slump.
Building permits also shot up to a four-year high, rising 11.6% to an annual rate of 894,000. August’s permits were revised down slightly, to 801,000.
Permits for single-family homes rose 6.7% to an annualized 545,000 rate last month, while multi-dwelling permits increased 20.3% to 349,000.
In September, housing starts rose in all regions except the Northeast, with construction strongest in West and South.
The nation’s construction industry has finally perked up in 2012 after its worst slump in the modern era, following the collapse of a housing bubble in 2006. Super-low interest rates, a modestly improved economy and a receding foreclosure crisis have all contributed to the upward shift in the demand for new homes.
Yet even though the pace of construction is nearly 35% higher compared to a year ago, construction activity overall remains considerably shrunken from its pre-bubble heyday. Before the bust, housing starts topped 2 million a year.
Still, an expanding housing market is a welcome sign for a U.S. economy that’s been struggling to gain traction, even if it only adds a little to the nation’s growth. Housing is one of the few segments of the economy not to experience a big hiccup this year.
The improving real-estate market has also been a boon for publicly traded home builders such as Meritage
In normal times, a strong housing market is a good economic tonic, since large amounts of raw materials and finished goods are required to build and furnish homes, and the construction trade employs millions of workers directly or indirectly.