Homebuilders began working at a slower pace in January than December, but the decrease occurred in the area of apartment construction, which dropped twenty-four percent. However, the rate of single-family homebuilding increased 0.8 percent.
Even though there was a decline, home construction in January was the third-highest since 2008 and demonstrates continued strengthening in residential real estate. Another promising sign is that building permits, which signals future construction, are at their highest point since mid-2008.
The Commerce Department stated that builders started work at an annual rate of 890,000 homes last month, which was down 8.5 percent from December. Analysts did expect a decline in January because of the sharp gain in December.
January was only the second decrease in construction in the past six months, but the annual pace for homebuilding remains 23.6 percent higher than a year ago. Due to the increasing number of building permits requested, it shows that the decline in January should be temporary and that house construction should continue to increase.
The housing market is slowly improving after the nearly five year collapse. Decrease in unemployment and low mortgage rates have encouraged more people to purchase homes. A steady rise in prices reflects fewer homes for sale, which explains why the supply of previously occupied homes for sale has reached its lowest number in more than a decade.
For the year 2012, builders started work on 780,000 homes, which is a twenty-eight percent increase from 2011. Sales of new homes last year also jumped close to twenty percent to 367,000. New homes represent only a part of the housing market, but it is estimated that each home creates an average of three jobs and generates $90,000 in tax revenue.
If you are looking to purchase or sell real estate, feel free to contact Pulgini & Norton, LLP at (781) 843-2200 or (888) 344-2046, or email us with any questions you may have. Our attorneys offer nearly 40 years of combined legal experience and provide thorough, timely, and results-driven service in many aspects of both residential and commercial real estate.
Cited Sources:
US housing starts dip but remain at solid pace, Bloomberg Businessweek, February 20, 2013