WASHINGTON – Home construction is making a long-awaited recovery that could help energize the U.S. economy.
From areas like Phoenix that are finally arising from the housing bust to cities like Chicago and Minneapolis where strong economies have lifted demand, residential construction is healthier than at any time since sales and prices collapsed five years ago.
The improvement has been gradual. But builders are responding to interest from buyers drawn by reduced prices, record-low mortgage rates and rising rents, which have made home purchases comparatively appealing. And the supply of new homes has shrunk to near record lows. That’s pushing developers to build more.
We’ve been hoping for this for a long time, said Celia Chen, a housing economist at Moody’s Analytics. Housing has been flat-lining at the bottom for two years. It looks like things are turning.
Last month, U.S. builders broke ground on the most homes in nearly four years. Single-family home building – the bulk of the market – rose for a fourth straight month. And permits to build single-family homes reached their highest point since March 2010.
Locally, the Home Builders Association of Fort Wayne last week reported year-to-date figures that showed construction permits rose more than 12 percent through the first six months of the year. The group also said there were 82 permits in June, compared with 56 in June 2011 – a 46 percent increase.
Home construction nationally still has a long way to go to fully regain its health. June’s seasonally adjusted annual rate of 760,000 is the highest since October 2008. But it’s only about half the 1.5 million annual pace that economists consider normal.
From the depth of the housing bust in April 2009, when the seasonally adjusted annual rate bottomed at 478,000 homes, the improvement has been slow but steady.
Building increased in early 2010 as the government’s tax credits for home buyers lifted sales. Beginning that summer, the pace essentially stalled until late 2011, when it began rising gradually.