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Economic News

Starts, permit levels signal recovery for new home sector

New home construction has been one of the sectors hardest hit by the recession, but signs of a recovery are finally coming to fruition – this year, construction may actually add to the GDP for the first time since 2005.

Home building starts and permits

According to the U.S. Commerce Department, new home building permits jumped 5.1 percent in February, hitting its highest point since October 2008, just as housing crash hit.

Despite housing starts falling 1.1 percent, analysts suggest permit activities that predict future starts is an indicator of the beginning of the recovery process for the new home sector and potentially for the entire American housing market.

February permits beat economists’ expectations and construction is up 34.7 percent from February 2011, the largest annual increase since April 2010. The Commerce Department projects residential construction will aide economic growth this year which has not happened since 2005.

Despite increasing permit levels, builders remain cautious in their optimism, with confidence levels at a five year high this month, yet not surging at a dramatic rate.

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Multi-family starts skyrocket

As former homeowners become renters, renters hesitate to buy, and Millennials opt out of homeownership, multi-family is being rewarded, and starts rose 21.1 percent this month alone. Permits rose 5.6 percent, meaning a spring full of starts.

Permits for single family homes rose 4.9 percent, the highest level reached in nearly two years. Home completions rose 6.2 percent, and while new home builders continue to be challenged by tight lending for their projects and for consumers and battling against distressed sales, the new home construction sector that has been decimated by the recession is finally gaining some steam.

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.


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