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US builders start fewer homes
Source: Agencies |
November 18, 2011, Friday
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BUILDERS in the United States started slightly fewer homes in October but submitted plans for a wave of apartments, a mixed sign for the struggling housing market.
Builders broke ground on a seasonally adjusted annual rate of 628,000 homes last month, the US Commerce Department said yesterday. That's roughly half the 1.2 million that economists equate with a healthy housing market.
But building permits, a gauge of future construction, rose nearly 11 percent. The increase was spurred by a 30 percent increase in apartment permits, which reached its highest level in three years.
Over the past year, apartment permits have surged roughly 63 percent. Single-family permits have increased just 6.6 percent in that span.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. The surge in apartments may help boost economic growth, but it has not been enough to offset the steep declines in single-family homebuilding.
"Given continued constraints on homeownership and rising rents across the country, the trend toward multi-unit construction is one that we expect to continue going forward," said James Marple, senior economist at TD Economics.
New-home construction and sales are in the midst of one of its worst years in history. Demand for new homes is weak, and historically-low mortgage rates and plunging home prices have done little to help.
Jennifer Lee, senior economist at BMO Capital Markets, said the housing industry continues to be the US economy's "weak link." But the October report wasn't as bad as many analysts had expected.
Single-family homes, which make up about 70 percent of residential home construction, rose nearly 4 percent last month.
Builders broke ground on a seasonally adjusted annual rate of 628,000 homes last month, the US Commerce Department said yesterday. That's roughly half the 1.2 million that economists equate with a healthy housing market.
But building permits, a gauge of future construction, rose nearly 11 percent. The increase was spurred by a 30 percent increase in apartment permits, which reached its highest level in three years.
Over the past year, apartment permits have surged roughly 63 percent. Single-family permits have increased just 6.6 percent in that span.
Renting has become a preferred option for many Americans who lost their jobs during the recession and were forced to leave their homes. The surge in apartments may help boost economic growth, but it has not been enough to offset the steep declines in single-family homebuilding.
"Given continued constraints on homeownership and rising rents across the country, the trend toward multi-unit construction is one that we expect to continue going forward," said James Marple, senior economist at TD Economics.
New-home construction and sales are in the midst of one of its worst years in history. Demand for new homes is weak, and historically-low mortgage rates and plunging home prices have done little to help.
Jennifer Lee, senior economist at BMO Capital Markets, said the housing industry continues to be the US economy's "weak link." But the October report wasn't as bad as many analysts had expected.
Single-family homes, which make up about 70 percent of residential home construction, rose nearly 4 percent last month.
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