Good news about the real estate market came from from the National Association of Home Builders (NAHB) this morning as they announced that housing starts are up significantly. As housing starts surge to 2008 levels, the real estate market reaches a level of activity last seen since the middle of 2008. This welcome news, following the latest good news in the jobs reports, makes it look as though the housing market is starting to gain grounds in its recovery. While the rest of the economy has been picking up speed, the housing market has continued to flounder. The report showing the increase in housing starts, and the increase in building permits, may be the start to the long awaited housing recovery.
The annual rate of privately owned housing starts increased 15% from August to September, bringing them to a seasonally adjusted 872,000. These are numbers that have not been seen since July of 2008 (see trends on the NAHB chart). Likewise single family housing starts increased 11% to 603,000. The large increase in starts is a welcome surprise, and beat nearly all analyst expectations.
Like the housing starts, building permits are also up. Permits for privately owned housing units increased 11.6% from August to September 2012, and increased 45.1% from September 2011 to 2012. The surge will likely help to carry the good employment news offering many more construction jobs to those looking for work.
As the housing supply dwindled, more people chose to build new. This has led to an increase in the number of housing starts and building permits. As more Americans are getting back to work there is more money flowing through the economy allowing people to opportunity to build their own houses. The new construction supplies more jobs to those still searching for work, helping to spur the recovery cycle. Even after the homes are complete, the new owners will need to furnish and stock their houses, leading to more retail sales. While the housing market is still not as good as it was, it is definitely better than it has been for several years.
With the Fed keeping interest rates low, mortgage rates have been at an all time low. Accompany that with reduced closing costs, and low housing prices, it was only a matter of time before we would see housing starts surge. With more Americans finding or retaining jobs, the market was poised to take off. As we move into the winter season, one that typically does not see as much new construction or even sales of existing homes, we can only hope that the market will continue to flourish.