Home building jumps in June
Wednesday, July 20, 2011
WASHINGTON (AP) — Builders broke ground on more single-family homes and apartments in June, as the home-building industry tried to shake off a historically bad spring.
The Commerce Department says builders began work on a seasonally adjusted 629,000 homes last month, a 14.6 percent increase from May. Still, that’s roughly half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market.
Much of the increase came from a surge in apartment construction, a volatile part of the industry. That jumped 31.8 percent last month.
Single-family home construction rose a more modest 9.4 percent. Building permits, a gauge of future construction, increased 2.5 percent. June’s building pace was the best showing since January and single-family home construction saw the biggest monthly increase since June 2009, when the recession ended.
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 the National Association of Home Builders.
Builders are nearly 31 percent ahead of the 477,000-per-year pace from April 2009, which was the lowest point on records dating back to 1959. Still, they are down roughly 73 percent from their peak of nearly 2.3 million homes in January 2006.
Cash-strapped builders are struggling to compete with deeply discounted foreclosures and short sales. A short sale is when lenders allow borrowers to sell their homes for less than what is owed on the mortgage.
New-home sales fell in May to a seasonally adjusted pace of 319,000 homes per year. That’s far below the 700,000 homes per year that economists consider healthy.
The builders’ trade group said Monday that its survey of industry sentiment rose to 15 in June. That’s after a May in which builder outlook hit its lowest level in nine months.
But the index is still just seven points above the lowest reading on record, in January 2009.