Housing Starts Soar to Highest Since 2008
Almost all of the growth comes in apartments, townhouses
By Kevin Spak, Newser User
Posted Nov 20, 2012 10:11 AM CST
Construction worker Elabert Salazar works on a house frame for a new home Friday, Nov. 16, 2012, in Chula Vista, Calif.   (AP Photo/Gregory Bull)

(Newser) – The housing market might finally be coming around. The number of new homes that began construction last month took a surprise 3.6% leap to an 894,000 annual rate—the highest since July 2008, the Commerce Department announced today. That's well above the 840,000 economists surveyed by Bloomberg were expecting, though it's not all good news; building permits, a sign of future construction, fell.

"We're in a strong phase of the recovery," says a Toll Brothers exec. "It's a function of five years of pent-up demand being released," and "affordability and rising prices is also spurring people to buy." Almost all of the growth, however, was in multifamily homes, like townhouses and apartment buildings. Starts there shot up 11.9%, while single-family house construction actually fell 0.2%.

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Nov 20, 2012 2:07 PM CST
(clipped from article) August 21, 2012 Low mortgage interest rates, pent-up demand for housing, and growing confidence that the housing recovery is here to stay will offset weaker job growth. Investor demand will also help drive up home sales this year and in early 2013. House prices will remain the laggard, perhaps dipping a little before hitting a sustained and solid pace of appreciation next year. By 2013, the housing recovery will be in full swing, adding to overall economic growth. With construction picking up and house price declines flattening this year, housing will add to the economy’s growth for the first time during the recovery. Homebuilding will add 30 basis points to real GDP growth, while stability in house prices will add 20 basis points. Housing’s contribution will still be paltry this year, but it is turning the corner at a time when growth in other sectors of the economy is softening. By the end of next year, a self-reinforcing positive cycle will kick in as stronger job growth supports housing and housing generates more jobs. Housing will once again be a significant force in the economy.
Nov 20, 2012 12:13 PM CST
So, in other words, the 1% is investing in real estate. Yippee.
Nov 20, 2012 11:43 AM CST
By no means is this good news for Americans. The average American family still cannot afford to buy a home. The majority of buyers are investors. Foreign and domestic investors are hoping to catch a ride on the real estate money making machine. They see it as a good investment if they can make $100,000 on a home in a 6 month to 1 year time frame. Unfortunately this upswing in home prices is due to investors only. Once the home appreciates they will only be able to sell it to other investors(since the average American cannot afford a home). The last housing boom was lead by single families trying to get into a home. Investors buying from investors will only last for a shot period. Then the housing marking will tank again.