U.S. New home construction rises 22% on falling home prices

March 17, 2009 by · Leave a Comment
Filed under: Real Estate News 

If you read the fine print, most of the gain was from apartment construction.  What this means is because people are losing their homes through bad mortgages and borrowers who could not make the payments, we are seeing more apartment being built to accommodate this rise in demand, would not say this is positive for house except it is good that people will have places to live.  All in all this is going to lead to lower house prices because more people will just rent and that will equal more empty units with higher than market rate prices.

News:

The number of new housing projects that builders broke ground on in February rose sharply, defying economists’ forecasts for yet another drop in activity.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units.

February’s pickup was led by a big increase in apartment construction.  By region, all parts of the country reported an increase in overall housing construction, except for the West, which led the housing boom and has been hard hit by the bust.

Some economists said the new housing figures offered a glimmer of hope.

“While it may be premature to call an absolute bottom in residential construction, we are clearly getting close,” said Adam York, economist at Wachovia.

Overall housing construction activity fell to a pace of 477,000 units in January, according to revised figures. That was a little higher than first reported but still marked a record low.

Applications for building permits, considered a reliable sign of future activity, also rose in February by 3 percent to an annual rate of 547,000. Economists were expecting permits to fall to a pace of 500,000 units.

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