U.S. home building is fastest since July 2008

WASHINGTON -- U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months. The gains show the housing recovery is strengthening and could help the economy grow.

The Commerce Department said Wednesday that home building rose 15% last month to a seasonally adjusted annual rate of 872,000. Single-family construction rose 11% to the fastest rate in four years. Apartment construction increased 25.1%.

Applications for building permits, a sign of future construction, jumped nearly 12% to an annual rate of 894,000, also the highest since July 2008.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG.

The construction rate has increased by more than 38% over the past 12 months.

Housing starts are now 82.5% above the recession low rate of 478,000 hit in April 2009. That's still well short of the 1.5 million that economists consider healthy and far below the more than 2 million built in 2007 -- the peak of the housing boom. But the steady upward trend suggests builders believe the housing rebound is durable.

"This is a good report," said Patrick Newport, U.S. economist at IHS Global Insight. "It is telling us that the housing market is improving, and there is no reason to think that this will not continue going forward."

Record-low mortgage rates, stable price increases and a limited supply of previously occupied homes have made newly built homes more attractive to buyers. Builder confidence is at a six-year high, according to a survey released Tuesday by the National Association of Home Builders. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.

Newport said housing starts should total 750,000 for the year. He expects starts will climb to 950,000 next year and 1.27 million in 2014. By 2015, he said home construction should reach more than 1.5 million.

He also predicts that housing will add about 0.25% to overall economic growth this year. If that forecast proves accurate, it will be the first year that housing has been a positive factor for economic growth in five years.

"The rest of the economy is still struggling but housing is doing better because as the population grows, we need new houses to meet that demand," Newport said.

Sales of new homes were up nearly 28% in August compared with the same month last year. Even with the gains, sales remain near depressed levels. Economists say more jobs and better pay are needed to help accelerate sales.

Though new homes represent less than 20% of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.

Construction activity rose in three of the nation's four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20% in both regions. Construction of new homes and apartments rose 6.7% in the Midwest. Housing starts fell 5.1% in the Northeast.

Source: http://www.freep.com/article/20121018/BUSINESS04/310180215/U-S-home-building-is-fastest-since-July-2008

U.S. builders start more single-family homes

WASHINGTON -- U.S. builders started work on more single-family homes in May and requested the most permits to build homes and apartments in three and a half years. The increase suggests the housing market is slowly recovering even as other areas of the economy have weakened.

The Commerce Department said Tuesday that builders broke ground on 3.2 percent more single-family homes in May, the third straight monthly increase.

Overall housing starts fell 4.8 percent last month to a seasonally adjusted annual rate of 708,000. But that was entirely because of a 21.3 percent plunge in apartment construction, which can be volatile from month to month.

The government also said April was much better for housing starts than first thought. The government revised the April starts to 744,000 -- up from an initially reported 717,000 and the fastest building pace since October 2008.

And builders are more optimistic about the next 12 months. They requested more permits to build homes, a gauge of future construction. Permits increased to a seasonally adjusted rate of 780,000 -- the most since September 2008.

Even with the gains, the rate of construction and the level of permits requested remain roughly half the pace considered healthy. Yet the increases add to other signs that the home market may finally be starting to recover nearly five years after the housing bubble burst.

The mostly positive report contributed to a strong opening on Wall Street, although much of the rally was driven by expectations that the Federal Reserve will take action this week to jumpstart the economy.

The yield on the 10-year Treasury note ticked higher after the report was released. Stocks also increased -- the Dow Jones industrial average rose more than 122 points in midday trading.

Builders have grown more confident since last fall, in part because more people are expressing an interest in buying a home. Cheaper mortgages and lower home prices in many markets have made home buying more attractive. Many economists believe that housing construction could contribute to overall economic growth this year for the first time since 2005.

"We continue to expect housing activity to increase gradually in coming months and residential investment to make a positive ... contribution to GDP growth," said Peter Newland of Barclays

By region of the country, housing starts rose 14.4 percent in the West, but dropped in other parts of the country.

The declines primarily reflected the weakness in apartment activity.

Still, the pace of home sales remains well below healthy levels. Economists say it could be years before the market is fully healed.

Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks. Some would-be home buyers are holding off because they fear that home prices could keep falling.

The economy is growing only modestly and job creation slowed sharply in April and May.

U.S. employers created only 69,000 jobs in May, the fewest in a year.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy.

Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to data from the Home Builders.

Source: http://www.bradenton.com/2012/06/20/4084406/us-builders-start-more-single.html

US real estate outlook dims in April

(AP) WASHINGTON - The outlook among U.S. homebuilders dimmed in April after six months of rising or steady confidence. The decline suggests the housing market remains weak despite modest gains.

The National Association of Home Builders/Wells Fargo says its builder sentiment index fell this month to 25 from 28. Last month's reading was the highest since June 2007. The index rose for five straight months between September and February.

Builders expressed weaker confidence in sales over the next six months. A separate gauge measuring that outlook rose for six straight months before falling this month, from 35 to 32.

Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached hit that level since April 2006, the peak of the housing boom.

Source: http://www.cbsnews.com/8301-500395_162-57414733/us-real-estate-outlook-dims-in-april/

Real Estate market returning

Sales of existing homes in the four-county Milwaukee area rose 4.2% last year, but prices continued to drop - in some cases reaching average lows not seen since 2001.

Economists said Wednesday, however, that unless the economy takes a bad turn, they believe the worst likely is over for the existing-home market, and prices should begin to slowly rise as unemployment decreases and consumer confidence grows.

Still, 2011 was a tough year in residential real estate in the metro area, as foreclosures held prices down - especially in Milwaukee County - and there were many more homes on the market than buyers. Financing also remained difficult for some people interested in buying a home.

"I'll tell you, nobody is sorry 2011 is gone," said Mike Ruzicka, president of the Greater Milwaukee Association of Realtors.

Realtors sold 12,888 homes in 2011, compared with 12,367 in 2010, according Metro MLS Inc. data released Wednesday.

The average price of homes sold in Milwaukee County last year was $128,004, down almost 11% from 2010. The last time the average price was lower was in 2001, at $125,591. Sales increased in Milwaukee County by 3.4% last year.

In Waukesha County, the average sale price was $260,179, which is the lowest since an average of $256,244 was recorded eight years ago. Sales rose 6.6% in Waukesha County.

The average home sale price in Ozaukee and Washington counties was the lowest for a full year since 2003.

Ruzicka said the market appears to have bottomed in the third and fourth quarters of 2010 into the first quarter of 2011. After a generally soft year, it took an uncharacteristically large number of sales in the last two months of 2011 to push the annual sales figure past 2010, Ruzicka said. He attributed the strong finish to a rise in consumer confidence.

That theory was backed by Russell Kashian, a University of Wisconsin-Whitewater economics professor who tracks housing in the state. He said consumers who still are employed sense that they've weathered the economic downturn, restoring some confidence.

While he said more turbulence could lie ahead in the residential real estate market - and home-building will be slower to come back - it is beginning to recover and return to a pre-bubble, pre-recession climate.

"I think we're back to the era where people are buying a house primarily as a place to live and not primarily as an investment. That's a secondary thought," Kashian said.

Risk fading

Professor Morris A. Davis, a real estate expert with the University of Wisconsin-Madison School of Business, said the risk of prices falling further is fading, although a blowup of Europe's economy could slow a recovery.

"But my own view on this is there's not much downside risk to house prices," Davis said. "I'm not a financial planner or anything like that, but I've been encouraging people to buy homes. Most metrics I look at suggest that housing is fairly valued right now or even is undervalued."

Davis said he is forecasting "a few percent" growth per year in housing prices over the next 10 years as the economy heals and more people are employed.

Source: http://www.jsonline.com/business/area-home-sales-rose-42-last-year-but-prices-down-significantly-ur3oue7-137101808.html