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New-house construction hits four-year high

Posted: November 21, 2012 5:54 p.m.
Updated: November 21, 2012 5:54 p.m.

New-home construction in the country climbed to a four-year high, according to data tracked by U.S. Department of Housing and Urban Development.

New housing starts in October were up 3.6 percent over September when construction began on 894,000 new homes.

Even more dramatic, the number of new housing starts is up nearly 42 percent over a year ago in October 2011.

The growth marks the fastest rate since July 2008, according to the Commerce Department.

Building permits, a sign of activity to come, were up 2.7 percent in October over September. And permits jumped nearly 30 percent over the number issued a year ago in October 2011.

The data enforces the growing confidence in the new-home market recovery that U.S. homebuilders are reporting. Confidence among homebuilders just rose to a six-year high, according to the National Association of Home Builders/Wells Fargo builder sentiment index released Monday.

Confidence in October rose to 46, up from 41 in October, the highest reading since May 2006 prior to the housing bubble burst. Only one year ago, that confidence number stood at 17 in October 2011.

The homebuilder confidence survey is based on responses from 417 builders. In January 2008, the index sank to 8, its lowest point dating since 1985, according to a report by Associated Press.

Housing completions were also up in October. The number of homes built and made ready for sale rose 14.5 percent over September. Homes built jumped 33.6 percent over a year ago in October 2011.

Encouraging signs for California include building permits, where the number of houses started and completed were strongest in the South and West regions of the country. The Northeastern region remains the weakest, followed by the Midwest.

With all the good news on the new home construction front, builders remain concerned about difficulties for buyers obtaining mortgages, low appraisals that fall below the contract prices, and in some cases rising costs for materials and labor.

Those concerns, however, are tempered by rising buyer optimism and the pent-up demand cited by homebuilders. Also, over the past few years buyers finally purchased existing inventory, prompting new-home builders to jump-start their building efforts again. Over the past year, new homes sales have increased 27 percent according to the National Association of Home Builders.

The new-home sales momentum is being matched in the resale industry as well. Sales of previously occupied homes rose 2.1 percent in October, the National Association of Realtors said Monday. After several consecutive months of increased in existing home sales, the October numbers are roughly 11 percent higher than a year ago.


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