U.S. home construction is making a comeback that could invigorate the economy’s still-weak recovery.
Builders last month started construction on single-family houses and apartments at the fastest rate in more than four years, the Commerce Department said Wednesday. And they laid plans to build homes at an even faster pace in coming months – a signal of their confidence that the housing rebound will last.
The pace of construction has grown steadily in the past year, and analysts expect it to keep rising. The increase has been fueled by record-low mortgage rates, more stable home prices and a shortage of previously occupied homes for sale.
More new homes could accelerate growth and help boost hiring, especially in areas such as construction, home improvement and retailing. More homeowners lead to more people buying home furnishings.
“I don’t have that crystal ball, but I will say we’re seeing the best sales we’ve seen in five years, and it sure feels good,” Douglas Yearley, CEO of Toll Brothers Inc., said in an interview with the Associated Press. Toll builds luxury homes in 20 states.
The government’s report Wednesday on home construction in September was filled with encouraging details.
Overall, the number of homes that were started increased 15 percent from August to a seasonally adjusted annual rate of 872,000. That’s the fastest rate since July 2008.
Single-family homes, which made up more than two-thirds of the new construction, rose 11 percent to 603,000. That was also the quickest rate in four years. Apartment construction, which can be more volatile from month to month, rose 25.1 percent.
And applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, another high point since July 2008.
The rate of new construction has surged more than 38 percent in the past 12 months.
Housing starts are now 82.5 percent above the annual rate of 478,000 in April 2009, the recession low. They are still well short of the 1.5 million annual rate that economists consider healthy. And they are far below the more than 2 million homes started in 2007, the peak of the boom.
But the steady upward trend appears likely to endure, analysts say.
“The housing market is improving, and there is no reason to think that this will not continue going forward,” said Patrick Newport, U.S. economist at HIS Global Insight.
The report came a day after the National Association of Home Builders said confidence among builders had reached a six-year high.
Home buying is likely to expand now that the Federal Reserve is buying mortgage bonds to try to push record-low long-term mortgage rates even lower.
Though new homes represent less than 20 percent of housing sales, they exert an outsized impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.