New Housing Starts

by Carla Hill

Housing starts rose last month. They were up 7.2 percent from February figures. The National Association of Home Builders (NAHB) reports that builders are remaining cautious. "While the overall rate of new-home production remains quite low and is still being weighed down by significant uncertainties among both home builders and buyers, this latest report is encouraging," said Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "It means that some builders are cautiously beginning to re-stock their extremely thin inventories of new homes in anticipation of gradual improvement in consumer demand as the economy slowly inches toward recovery."
Regionally, the Midwest saw the most impressive gains, rising 32.3 percent. The West also saw double-digits gains of 27.6 percent. The Northeast experienced a more modest 5.4 percent gain, while the South saw housing starts decline by 3.3 percent.
Building permits are another indicator of future movement in the real estate industry. The U.S. Commerce Department reports that building permits were also up, rising 11.2 percent. In fact, the only region that didn't post a gain was the Northeast. The West was up by 37.1 percent. Single-family permits rose just 5.7 percent, while multifamily permits rose 25.2 percent .
According to the U.S. Commerce Department, "Privately-owned housing completions in March were at a seasonally adjusted annual rate of 509,000. This is 14.2 percent (±13.9%) below the revised February estimate of 593,000 and is 20.8 percent (±9.6%) below the March 2010 rate of 643,000."
"The modest improvement in new-home production and permitting in March is in line with our forecasts for incremental gains through the spring buying season," said NAHB Chief Economist David Crowe. "While our builder members continue to experience a great number of challenges with regard to competition from foreclosed and short-sale properties, low appraisal values and tight credit conditions, they have noted slight improvements in interest among qualified buyers, and they need to be ready to meet the demand as it materializes."
What about new home sales? It's more good news this week, as March sales for new single-family houses were up 11.1 percent. While this is still 21.9 percent below year ago levels, upward movement is good movement.
According to the U.S. Census Bureau, "The median sales price of new houses sold in March 2011 was $213,800; the average sales price was $246,800. The seasonally adjusted estimate of new houses for sale at the end of March was 183,000. This represents a supply of 7.3 months at the current sales rate."
The housing industry has been experiencing an uneven recovery, and these latest reports indicate that some areas are still feeling pains. Positive stats, however, give hope that the market is moving in the right direction.
Published: April 26, 2011

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