U.S. production of new single-family homes and apartments increased 1.5% in January, according to the U.S. Commerce Department, up from significantly upward revised numbers for the previous two months to a seasonally adjusted annual rate of almost 700,000 units. The increase marks the second-best pace of overall housing production since October 2008.
"Today's solid housing starts report indicates that builders are putting more of their crews back to work, and adds to the growing field of evidence that the overall housing market is gradually but consistently moving in the right direction," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, FL.
"The fact that the three-month moving average for housing starts has now increased for nine consecutive months and is approaching the 700,000 mark for the first time since October of 2008 is indicative of a solid recovery in housing activity stemming from recent firming in employment and consumer confidence measures," agreed NAHB Chief Economist David Crowe. "That said, housing production is still far from what would be considered normal in a healthy market, and many challenges remain for home builders in terms of tight credit conditions, difficult appraisals and the continued flow of foreclosed properties on the market - all of which are certainly slowing the pace of improvement in both housing and the overall economy."
Following significant upward revisions for both November and December, single-family starts held virtually flat in January with a 1.0% decline to a 508,000-unit rate. Together with the revised December number, this is the best pace of single-family starts since April of 2010, when the home buyer tax credit was active. Single-family building permits, which can be an indicator of future construction activity, also held virtually unchanged, with a 0.9% increase in January to 445,000 units - again, the best pace since April of 2010.
The multifamily segment also continued to display greater strength in January following a 55% increase in starts activity in 2011 that was attributed to rising demand for rental apartments. Multifamily starts rose 8.5% to a seasonally adjusted annual rate of 191,000 units for the month. Permits edged up 0.4% to 231,000 units.
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