U.S. housing starts posted big gains in September, reaching their highest level in more than four years and raising new hope for a sustained recovery.
A 15 percent gain brought the pace of new housing construction to a seasonally adjusted annual rate of 872,000 units, up from 758,000 units in August, according to the joint report by the Department of Housing and Urban Development (HUD) and the Census Bureau released Wednesday (Oct. 17).
|A housing recovery is “solidly” underway in many key markets, experts say.|
The increase in starts, coupled with an 11.6 percent gain in permit issuance to 894,000 units, were the strongest numbers seen in both categories since July 2008.
“Builders are responding to the rising demand for new homes as consumers begin to feel more confident about their local markets and put back into motion purchasing plans that were on hold during the recession,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, FL.
‘Long Way to Go’
Rutenberg’s optimism was tempered with caution, however. “While September’s surge in activity is certainly encouraging, we need to remember that we still have a long way to go back to a fully functioning market,” he says.
Credit availability, appraisal issues, increasing costs in building materials, and a declining inventory of buildable lots are some of the challenges that still must be addressed.
Rutenberg is in step with the NAHB’s chief economist, David Crowe, who suggests that the strong report indicates rising builder confidence and confirms the belief that a housing recovery is “solidly underway.”
“That said,” Crowe added, “we are now almost at the halfway mark in terms of what would be considered a normal amount of new-home construction in a healthy economy, and we need to see consistent improvement like this over an extended period to get back to where the market should be in terms of generating jobs and economic growth.”
Still, the increase in housing starts and permits was good news for the battered construction labor market, experts note. Construction has lost nearly 2 million jobs since the end of 2007.
Single- and Multi-family Gains
The overall rise in new-home construction in September was reflected across both the single- and multi-family sectors.
Single-family housing starts posted an 11 percent increase, to a rate of 603,000 units—the best pace since August 2008, according to the report.
Multi-family housing starts posted a 25.1 percent gain, to 269,000 units—the best pace since September 2008, the report revealed.
Combined single- and multi-family starts rose in all but one region of the country in September, with a 6.7 percent gain in the Midwest, a 19.9 percent gain in the South, and a 20.1 percent gain in the West.
Only the Northeast posted a decline, of 5.1 percent.
Permits Predict Growth
Issuance of new building permits, a frequent indicator of future building activity, also registered significant gains in both the single-family and multi-family sectors in September.
Single-family permits increased 6.7 percent to a seasonally adjusted annual rate of 545,000 units, while multifamily permits leaped 20.3 percent to 349,000 units. In both cases, these were the highest permit numbers since July 2008.
Regionally, permit issuance rose across the board in September, with the Northeast posting a 6.0 percent gain, the Midwest posting a 19.5 percent gain, the South posting a 10.5 percent gain, and the West posting an 11.3 percent gain.