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Housing starts jump to highest level in four years

Justifying builder confidence levels hitting a ten-year high, housing starts jumped in some parts of the nation by as much as 37 percent in one month, but be careful to look at the big picture – this is a sign of improvement, not of a recovery.

Housing starts jump

According to the U.S. Commerce Department, housing starts rose 6.9 percent from May to June, hitting its highest rate since October 2008, despite multifamily starts slowing as they continue to be the most volatile sector. Single-family housing starts rose for the fourth consecutive month, reaching a two-year high.

Permit levels are typically used as a measure of future ground breakings, which fell 3.7 percent in June, after May’s levels that had hit a three-year high. Just like starts, multi-family permits fell, while single-family permit levels are at a two-year high.

Single family housing starts fell slightly in the Midwest and South in June, but rose an impressive 37 percent in the west and 22 percent in the Northeast.

Today’s report from the Commerce Department echoes the improving builder confidence reports from the National Association of Home Builders who just reported yesterday that builder confidence hit its highest point in nearly a decade.

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Small signs of a recovery in the market

Meanwhile, last week, the Freddie Mac Weekly Primary Mortgage Market Survey (PMMS), revealed that mortgage interest rates fell across the board from the week prior. Freddie Mac reports the average 30-year fixed rate mortgage (FRM) is at 3.56 percent, a 15-year fixed rate mortgage fell to 2.86 percent, and a 5/1 adjustible rate mortgage (ARM) hit 2.74 percent.

Mortgages continue to remain at historic lows, and mortgage application volume is improving, and the growing consensus is that housing construction could contribute to the economic growth this year for the first time since 2005, but builders and consumers continue to be challenged with tight lending conditions, and builders are competing with discounted short sales and foreclosure.

Housing starts and builder confidence levels are both making historic strides, yet both remain under the level that would be considered healthy, so while building activity is increasing, these are merely signs of life in a sector of the economy that has been struggling to stay alive for many years, but has weathered the economic storm and is slowly gaining confidence.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

4 Comments

4 Comments

  1. MichaelWoods

    July 18, 2012 at 2:58 pm

    I sincerely hope you’re right. With all the foreclosures on the market, I would almost expect sales to have picked up, but more due to real estate investors seizing upon all these great deals.

  2. Pakistan Real Estate

    July 19, 2012 at 7:14 am

    The above information is appreciable and the property related people will love to read that the property prices are increasing and property sales are showing an increasing trend this is the news for which every property related individual was waiting for. The recession is vanishing out from the market and the property prices as well as the sale are increasing.

  3. Althea5jh058ay

    July 20, 2012 at 8:20 am

    @MartieAbboe https://t.co/rEZRPUWw

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