IBJNews

Home construction jumps nationally

Back to TopCommentsE-mailPrintBookmark and Share

Home construction increased last month and applications for building permits also grew. But the gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.

Construction of new homes and apartments rose 10.5 percent in August from a month earlier, to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That's the highest level since April.

Pulling the figures up was a 32-percent monthly increase in the condominium and apartment market, a small portion of the market. Single-family homes, which represented about 73 percent of the market in August, grew more than 4 percent.

Housing starts are up 25 percent from their bottom in April 2009. But they remain 74 percent below their peak in January 2006. Single-family housing starts are up 11 percent from their low point in January 2009, but down 78 percent from their peak in January 2006.

Builders are struggling with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. They benefited in the spring from federal tax credits, but those expired in April.

Paul Dales, U.S. economist with Capital Economics, said the high number of vacant homes, mounting expectations of renewed price falls and economic constraints on households are weighing on the industry.

"Homebuilding activity remains at an astoundingly weak level," Dales said, adding that construction has to be more than double current levels for the market to be considered healthy.

Building permit applications, a sign of future activity, grew by nearly 2 percent to an annual rate of 569,000.

Lennar Corp., a major builder based in Miami, said Monday the number of buyers signing agreements to purchase its homes fell 15 percent from a year ago in the three months ended August 31.

"It's been a tough summer," said Stuart Miller, Lennar's CEO. on a conference call with investors Monday. "As we've gone into September, we're seeing a little bit of pickup in our traffic, but that shouldn't be cause to have a sigh of relief at this point."

Construction activity rose 34 percent in the West and was up 22 percent in the Midwest and 7 percent in the South. However, construction fell by 24 percent in the Northeast.

On Monday, the National Association of Home Builders said its monthly index of builders' sentiment was unchanged in September at 13. The index has now been at the lowest level since March 2009 for two straight months.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

ADVERTISEMENT