Building permits rose to their highest level in more than three years in March, a signal the housing market will continue its gradual recovery this year.
Permits, which provide a gauge for future building, were up 4.5 percent to a seasonally adjusted annual rate of 747,000 in March, the ideal performance since September 2008, the Commerce Department stated Tuesday.
Meanwhile, construction slowed to a seasonally adjusted annual pace of 654,000 homes last month, down 5.8 percent to the lowest level since October, mainly because of a 16.9 percent drop in apartment construction. Single-family homebuilding was mostly unchanged, dropping 0.2 percent to 462,000 units.
“While combined U.S. housing starts lost some ground in March, this was almost entirely due to typical month-to-month volatility on the multi-family side,” stated David Crowe, chief economist for the National Association of Home Builders.
“The fact is that single-family and multi-family starts and permits were all stronger in the first quarter of 2012 than they were in the fourth quarter of 2011, indicating that the market continues to slowly strengthen, albeit in fits and starts,” Crowe said.
A healthy level of construction is about 1.5 million. At the low point of the recession, construction starts dropped to 478,000.
He cited several signs of the housing market’s recovery, including a 10.3 percent increase in March from a year ago, as the mild winter might have pulled starts forward a couple months, denting March numbers.
From December to March starts are up 7.1 percent compared with the previous four months. Also, building permits are up 30.1 percent since last year.
“Construction still has a long way to go back to normal, and it is zigzagging rather than straight-lining,” Kolko stated in an email.
“But the trend is clearly up.”
While builder confidence has trended up since the fall, it fell for the first time in seven months in April as potential homebuyers remain cautious with the pace of the housing market’s recovery.
Confidence fell three notches to 25 from 28, falling back to January’s level, which was the highest since 2007, according to the NAHB’s index released Monday.
Winter sales of existing homes were the ideal in five years as the economy churned out more than 200,000 new jobs a month through the winter. Unemployment has dropped to 8.2 percent in March from 9.1 percent in August.
The housing market has showed others signs of improvement despite facing a slew of challenges.
Mortgage rates remain near historically low levels — around 4 percent for a 30-year fixed loan and near 3 percent fro 15-year mortgages — but buying is stymied by tight lending standards and higher downpayment requirements. There also has been an increase in failed contracts because of low appraisals.
Still, prices continue to fall, especially has foreclosures flood the market, making it much less costly to purchase a previously occupied home and putting pressure on builders to keep prices lower on new construction.
New home sales were the worst last year in almost 50 years.
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Submited at Tuesday, April 17th, 2012 at 8:00 pm on Uncategorized by hilman
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