Housing starts surpass 1 million in March
Homebuilders broke the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.
The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.
Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.
By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February's pace of 650,000, the fastest since May 2008. The government said February's pace was a sharp 5.2 percent higher than it had previously estimated.
Applications for building permits, a gauge of planned construction, declined 3.9 percent to an annual rate of 902,000. It was down from February's rate of 939,000, which was also nearly a five-year high.
Scott Laurie, president of Olson Homes, said that last month's falloff in single-family starts is not representative of what's happening in the market.
A scarcity in ready-to-build land has many builders working to get local governments to approve new land for construction, he said. The process can take 12 to 18 months. A survey of homebuilders released Monday noted similar concerns.
“You'll see starts will continue to increase as the year goes on and new projects start to open up,” Laurie said.
Laurie's company builds homes in Southern California priced roughly from $325,000 to $750,000. He says Olson's construction starts are on pace to climb at least 40 percent this year, as the builder moves to add as many as eight new communities.
“The market started showing improvement in the early part of 2012 and really hasn't slowed down since,” Laurie said. “Right now, were very bullish.”
The jump in home building is expected to contribute to economic growth in 2013 for a second consecutive year — a reversal from 2006 through 2011, when it held back the economy.
Deutsche Bank predicts that home construction will reach an annual pace of 1.2 million by year's end. Brett Ryan, an economist at Deutsche Bank, said that rate could add 0.5 percentage point to 2013 growth. That would be the biggest contribution from housing since 2004.
The housing recovery could spur an additional percentage point of growth by encouraging more consumer spending, Ryan said. More building and higher home sales mean Americans will likely spend more on things like furniture and landscaping. Higher home prices also start a “wealth effect” that gives homeowners the confidence to spend more.
Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy homes. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.
March's pace of homes started was nearly 46 percent higher than in the same month in 2012.
Housing construction fell 5.8 percent in the Northeast but gained in the rest of the country, led by a 10.9 percent rise in the South. It rose 9.6 percent in the Midwest and 2.7 percent in the West.
The National Association of Home Builders/Wells Fargo April survey released Monday showed that builders are concerned that limited land and rising costs for building materials and labor could slow sales in the short term. That led to a third consecutive monthly drop in confidence.
Still, the builders' outlook for sales during the next six months climbed to the highest level in more than six years, suggesting that the obstacles could be temporary.
And construction firms have stepped up hiring in recent months. They added 18,000 jobs in March and 169,000 since September, according to the Labor Department.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built generatesw an average of three jobs for a year and about $90,000 in tax revenue, according to statistics from the homebuilders.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Murray, Alpha notify West Virginia coal miners of layoffs
- Electric versions of Asian rickshaw make their way into U.S. market
- Shareholder vote causes ATI to review executive pay packages
- Cheap oil can hurt economy
- Pa. sees widespread job gains; jobless rate holds at 5.3%
- Developer hopes to make Allegheny Center a tech hub
- Look for 1st rate hike this year, Yellen says
- Wal-Mart presses meat, egg suppliers on antibiotics, animal treatment
- 5 battles the ’16 Camaro needs to win
- Low price sparks sales run
- Stocks end quiet week with loss