Housing Starts Offer Glimmer Of Hope
July 18, 2012
The U.S. Commerce Department reported new housing starts increased 6.9% in June from May to an annual rates of 760,000, translating into the highest level in nearly four years. Single family home starts also hit their best pace since early 2010, climbing 4.7% to an annual rate of 539,000. In the more volatile, multi family unit sector, activity decreased 12.8% during the same time to annual rate of 221,000.
The hike in new single-family home construction is the fourth straight monthly increase. And while the barometer of total future home construction, new building permits issued, declined 3.7%, it follows a three-and-a-half-year high hit in May. The number of permits for new single-family units hit its best level in a little more than two years.
Total housing starts rose in the West and Northeast regions of the country, seeing 37% and 22% increases respectively, but fell in the usually stronger South, as well as in the Midwest.
Despite the encouraging news, housing starts and permit levels are still considered by most experts to be about half of a level that's considered "healthy."
Optimism about housing over the long-term, however, is increasing with Federal Reserve Chairman Ben Bernanke earlier this week mentioning the improving housing market in an otherwise dismal report to Congress. Also a survey of builder confidence by the National Association of Homebuilders, released on Tuesday, shows it hitting a five-year high.
Hindering a greater expansion of housing are problems many applicants for new homes loans are having getting bank approval, as well as an inability to afford down payments that are often much higher now than during the pre-recession housing boom.