Housing Starts

In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s second update discusses housing starts.

  • Among this morning’s news releases was a positive surprise on home construction in December.
  • The Census bureau reported 954,000 starts in December, an increase of 12.1% from November which was revised modestly lower.
  • Single family construction, which has lagged for several years in the wake of the subprime crisis and subsequent bloat in inventory, was up 18.5% over the 12-month period ending in December.
  • Permits for construction of single family units were 27.3% higher over this period, suggesting confidence among builders for the future.
  • Despite the strong figures, starts remain well below the historic average and should not pose a threat to inventories as much of the building is done in niche markets. Furthermore, financing for construction has been tight in recent years, so new projects are vetted closely by builders and lenders who search out good local information. Builder confidence in local conditions is a positive indicator for inventories, sales volumes, and price trends in these markets.
  • New construction adds to GDP and employment growth.

Ken Fears, Director, Regional Economics and Housing Finance

Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.

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  1. New construction starts is a very good indicator of an improving real estate market. If contractors are willing to risk tens of thousands of dollars on the prospect of having future buyers, then there must be enough solid evidence of a market recovery. Combine this news with a decrease in foreclosures and we just maybe on the other side of the real estate recession.

    Atlanta, Georgia real estate market infographic