Housing Starts Rise to Highest Level in 4 Years

Builder confidence at 6-year high

By Inman News, Tuesday, November 20, 2012

U.S. housing starts in October were up 3.6 percent from September and 41.9 percent from October a year ago to reach heights they haven’t seen since 2008, according to the latest numbers from the U.S. Census Bureau.

Builders started construction on new homes and apartment units during October at a seasonally adjusted annual rate of 894,000, up from a downwardly revised rate of 863,000 in September and last year’s rate of 630,000, the Census Bureau said.

Single-family housing starts dropped 0.2 percent from September to October, to a seasonally adjusted rate of 594,000, which represented a 35.3 percent increase from last October and a 68.3 percent jump from a March 2009 bottom of 353,000.

Single-family housing starts are not rising as they often do coming out of a downturn, wrote Bill McBride, author of the blog, Calculated Risk. “Usually single-family starts bounce back quickly after a recession, but not this time because of the large overhang of existing housing units.”

Housing Starts

Year Total Change Single-family Change
2005 2,068.3 1,715.8
2006 1,800.9 -12.9% 1,465.4 -14.6%
2007 1,355.0 -24.8% 1,046.0 -28.6%
2008 905.5 -33.2% 622.0 -40.5%
2009 554.0 -38.8% 445.1 -28.4%
2010 586.9 5.9% 471.2 5.9%
2011 608.8 3.7% 430.6 -8.6%
2012* 770.0 26% 530.0 23%

*Estimated. Source: Calculated Risk

Housing starts have been rising on an annual basis every month since September 2011 and are up 87 percent from their April 2009 bottom of 478,000, according to census records dating back to January 1959.

Builder confidence is up again, for the seventh month in a row in October, reaching its highest level since May 2006, the National Association of Home Builders (NAHB) reported this week.

NAHB attributes the growing confidence to a rise in buyer demand. “In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates,” said NAHB Chairman Barry Rutenberg.

More builders still think the market is poor than those who think it’s good, however, noted NAHB. Tight lending conditions and “difficult” appraisals are “limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets,” said NAHB Chief Economist David Crowe.

All regions saw strong, double-digit-percentage, year-over-year jumps in housing starts, the Census Bureau showed, however, the Northeast and South saw a decline in housing starts for the month.

On a yearly basis, the Northeast led the way with a 42.2 percent jump from last October to an annual rate of 72,000, followed by the West with a 41.5 percent increase to a rate of 232,000, the South with a 22.6 percent increase to 431,000 and the Midwest with a 13.8 percent increase to 159,000.

For October, the West led the way with a 17.2 percent increase in housing starts from September. The Midwest followed with an 8.9 percent bump in housing starts for the month. And the Northeast and South’s annual rates dropped 6.5 percent and 2.5 percent, respectively.