Home Construction Grows
Original Post Date: October 19, 2010
By: Justin Lahart and Jeffrey Sparshott
U.S. home construction rose last month, suggesting that the lull in the housing market that followed the expiration of home-buyer tax breaks in the spring has ended.
September construction starts on single-family homes rose 4.4% from August, an annual rate of 468,000, the Commerce Department said Tuesday. Overall housing starts, which include groundbreakings on apartment and other multifamily buildings, increased 0.3% to a seasonally adjusted annual rate of 610,000.
Even though the level of monthly housing starts is up from an average of 530,000 in the first quarter of 2009, by the standards of the past 50 years it is still low, noted New York Federal Reserve Bank President William Dudley in remarks to reporters Tuesday.
“One reason why so little housing is being built is that many existing homes stand vacant,” he said. “We estimate that there are roughly three million vacant housing units more than usual. And more vacancies are added daily as the foreclosure process moves homes from families to mortgage lenders.”
Bank of America Corp., after imposing a moratorium on foreclosures earlier this month on documentation concerns, reopened more than 100,000 foreclosure actions Monday.
The combination of weak demand and the large supply of vacant homes for sale will leave housing starts subdued for several years, said Paul Dales, economist at Capital Economics. “We doubt that housing starts will reach one million before 2015,” he said.
Regionally, housing starts in September increased 4.8% in the South and 2.9% in the Northeast. They fell 8.2% in the Midwest, and 3.6% in the West.
Building permits for single-homes, seen as an indicator of future construction, edged up to 405,000 in September from 403,000 in August. But weighed down by a drop in permits for multifamily homes, overall permits fell by 5.6% to 571,000.