The housing industry still has to dig out of a deep hole, but residential construction data posted by the Department of Commerce offered some reason to cheer.
While the January building permit data for total privately-owned housing units (621,000 permits issued) was 4.9 percent below the revised December rate of 653,000, the year-to-year numbers are 16.9 percent above the January 2009 estimate of 531,000. Single-family authorizations in January were at a rate of 507,000 — 0.4 percent above the revised December figure of 505,000, but a whopping 48.2 percent above January 2009. The National Association of Home Builders (NAHB), Washington, D.C., said the decline in total building permits was due entirely to a 23 percent decline to 114,000 units on the multi-family side, which offset a big gain in that sector the previous month.
Privately-owned housing starts in January were at a seasonally adjusted annual rate of 591,000, 2.8 percent above the revised December estimate of 575,000 and 21.1 percent above the January 2009 rate of 488,000. Single-family housing starts in January were at a rate of 484,000 — 1.5 percent above the revised December figure of 477,000 and 21.1 percent better than 2009. The January rate for units in buildings with five units or more was 100,000.
“Builders are starting to see the positive impacts of home buyer tax credits and other favorable buying conditions in terms of consumer demand, and are cautiously increasing production to meet that demand,” said Bob Jones, a home builder from Bloomfield Hills, Mich., and this year’s NAHB chairman.
NAHB Chief Economist David Crowe said the favorable home buying conditions, including the availability of tax credits for first-time and repeat buyers, very favorable mortgage rates and stabilizing home values are helping drive potential buyers back to the market. However, he added that a continuing shortfall in available credit for building projects is “still producing a drag on new construction and slowing the progress of recovery in housing and the overall economy.”
NAHB said its most recent Builders/Wells Fargo Housing Market Index (HMI), also pointed toward increased builder confidence because of favorable home buying conditions and signs of healing in the job market.
“Builders are just beginning to see the anticipated effects of the home buyer tax credit on consumer demand,” said NAHB’s Crowe. “Meanwhile, another source of encouragement is the improving employment market, which is key to any sustainable economic or housing recovery. That said, several limiting factors are still weighing down builder expectations, including the large number of foreclosed homes on the market, the lack of available credit for new and existing projects, and inappropriately low appraisals tied to the use of distressed properties as comps.”