U.S. housing construction rises

Work on homes highest since ’08, boosted by hiring, record rates

A carpenter works on a new town house in Des Plaines, Ill., on Monday. Home construction jumped in December, the Commerce Department said Thursday.
A carpenter works on a new town house in Des Plaines, Ill., on Monday. Home construction jumped in December, the Commerce Department said Thursday.

— U.S. builders started work on homes in December at the fastest pace in 4 1/2 years and finished 2012 as their best year for residential construction since the early stages of the housing crisis.

Builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000, the Commerce Department said Thursday. That’s 12.1 percent higher than November’s annual rate and nearly double the recession low reached in April 2009.

“The housing market’s in a decent recovery,” said David Sloan, a New York-based senior economist at 4Cast Inc. who projected a rise in starts to a 920,000 rate. “There is momentum continuing in the housing market recovery.”

For the year, builders started work on 780,000 homes. That’s still roughly half of the annual number of starts consistent with healthier markets. But it is an increase of 28.1 percent from 2011. And it is the most since 2008 — shortly after the housing market began to collapse in late 2006 and 2007.

Home construction was booming in Northwest Arkansas in November, the most-recent statistics available from McGraw-Hill Construction of New York.

Residential construction was up 66 percent in Northwest Arkansas and 8 percent in the Little Rock metropolitan area in November, compared with November 2011, according to McGraw-Hill.

Northwest Arkansas saw $36.3 million in home construction starts in November, up from $21.8 million in November 2011, McGraw-Hill said. The Little Rock area saw $36.8 million in home con- struction starts in November, up from $34 million in November 2011.

New home construction starts in November for all of Arkansas were valued at $116.4 million, little changed from $116.9 million in November 2011, according to McGraw-Hill.

Steady hiring, record-low mortgage rates and a tight supply of new and previously owned homes available for sale have helped increase sales and prices in most markets. That has persuaded builders to start more homes, which adds to economic growth and hiring.

“There is no denying that the housing market recovery is solidifying, and we expect construction activity to ramp up to the 1 million annualized threshold by the end of this year,” said Michael Dolega, an economist with TD Economics, in a note to clients.

Dolega said the gains in home building helped drive up construction hiring in December by 30,000 jobs — the most in 15 months. He predicts the construction industry could add 500,000 jobs in 2013.

In December, the pace of single-family home construction, which makes up two-thirds of the market, increased 8 percent.

Single-family housing starts are now 75 percent higher than the recession low reached in March 2009.

Apartment construction, which is more volatile, surged 23 percent last month. It is now back to pre-recession levels.

Applications for building permits, a sign of future construction, inched up to a rate of 903,000 — the highest level since July 2008.

“The strong rise in singlefamily starts is a clear indication of builder confidence in the sales outlook,” said Pierre Ellis, an economist at Decision Economics, in a note to clients.

Confidence among homebuilders held steady in January at the highest level in nearly seven years. But builders are feeling slightly less optimistic about their prospects for sales over the next six months, according to a survey released Wednesday.

In November, sales of previously owned homes rose to their highest level in three years, while new-home sales reached a 21/2-year high.

Those factors have helped make homebuilders more confident and spurred new home construction. But homebuilders’ are still warily watching the current standoff in Washington between President Barack Obama and Congress over several approaching budget deadlines, including the need to raise the nation’s $16.4 trillion borrowing limit.

Though new homes represent less than 20 percent of the housing sales market, they have a significant effect on the economy.

Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Home Builders.

Information for this article was contribute by Martin Crutsinger of The Associated Press, David Smith of the Arkansas Democrat-Gazette and Michelle Jamrisko of Bloomberg News.

Business, Pages 27 on 01/18/2013

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