Housing starts up 23.6% over last year
Builders' optimism seems well-placed, as building permits and new-home construction show a significant increase over 2011. Resurgence may aid economy.
And now we know why builders are optimistic: They broke ground on 6.9% more new homes last month, a 23.6% increase over the same period last year.
Single-family housing starts, a less volatile index, were up 4.7% over May and 21.7% over June 2011, according to the latest numbers from the Commerce Department and the Department of Housing and Urban Development.
The number of building permits issued was down 3.7% from May but was 19.3% greater than the number issued in June 2011.
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"This was a good report overall," Martin Schwerdtfeger, an economist at TD Bank, told The Associated Press. The number of permits issued "suggests that the momentum in building activity observed in recent months should carry forward."
Based on June numbers, builders are in line to construct 760,000 new housing units this year, including 539,000 single-family homes. That's the best total number since October 2008 and the best single-family number since April 2010.
"This is one more piece of evidence that housing is starting to take back its traditional role of leading the nation out of recession, and tracks with our forecast for continued improvement in new construction through the end of this year," NAHB chief economist David Crowe said in a news release.
The number of new homes being built is still well below the 2 million rate reached during the housing bubble, but it has recovered considerably from the 478,000 built at the depth of the bust. Construction of about 1.5 million new homes a year is considered healthy.
While housing no longer plays the role it once played in the economy, the encouraging numbers still are a bright spot in a gloomy economic forecast. The AP writes of the gains in the housing market:
And a continued resurgence would deliver huge economic benefits: A healthy pace of 1.5 million new homes a year would add roughly 0.5 percentage point to annual economic growth, according to calculations by Joel Prakken, chairman of Macroeconomic Advisers.
It would also lower the unemployment rate by about 1.5 percentage points and create 50,000 additional jobs a month, half of which would be construction workers and contractors, Prakken estimates.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.