WASHINGTON – U.S. home construction slowed in December but ended 2013 with the best showing since the housing bubble burst.
The Commerce Department said Friday builders broke ground last month at a seasonally annual rate of 999,000. That’s 9.8 percent lower than November’s pace of 1.12 million, which was the fastest in five years.
For the year, builders started 923,000 homes and apartments, up 18.3 percent from 2012. It was the fourth straight annual gain and the strongest since 2007, when 1.36 million homes were started.
The housing market has been recovering steadily over the past year, helping to boost economic growth and create jobs. But a rise in mortgage rates from record lows reached a year ago have started to weigh on those gains.
Still, economists said December’s dip in activity followed a huge gain November. They blamed some of the decline last month on cold weather, which may have disrupted some construction activity.
“Despite really bad weather, builders still managed to keep digging and that is a great indication that the housing market continues to move forward,” said Joel Naroff, chief economist at Naroff Economic Advisors.
For December, construction of single-family homes, which makes up roughly two-thirds of homebuilding, fell 7 percent to an annual rate of 667,000. Construction of apartments, which can be more volatile, dropped 14.9 percent to a 332,000 rate.
Applications for building permits, considered a good sign of future activity, fell 3 percent in December to a rate of 986,000. Single-family permits fell 4.8 percent. Permits for apartments were unchanged.
Construction activity in December fell 33.5 percent in the Midwest and 12.3 percent in the South. Construction rose 15 percent in the West and was unchanged in the Northeast.
Mortgage rates are roughly a percentage point higher than in the spring. Still, they remain low by historical standards. The average rate on a 30-year mortgage fell to 4.41 percent this week. That’s down from a peak of 4.6 percent in August.
U.S. homebuilders remain generally upbeat ahead of the spring home-buying season.
The National Association of Home Builders/Wells Fargo builder sentiment index slipped to 56 in January, down slightly from a 57 reading in December. Readings above 50 indicate more builders view sales conditions as good rather than poor. Even with the small dip, the overall index remains in positive territory and is nine points higher than it was a year ago.
The spring buying and selling season kicks off next month, traditionally the time of the year that sets the tone for residential hiring and construction. Many builders, particularly smaller firms, sell homes that will take months to build.
Though new homes represent only a fraction of the housing market, they have an outsize 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 homebuilders association.
Tuesday, January 21, 2014
Monday, January 6, 2014
Housing Market Outlook 2014
In 2013, the housing recovery was a welcome bright spot for the economy: prices were shooting up, fewer homeowners were underwater, and builder confidence was finally on the upswing. It’s looking like 2014 should be another good year for housing–mostly. Here are some things housing experts expect to see in 2014:
1. More Homes Will Be Available
Short supply drove rapid price increases at the beginning of 2013, but watch for that to change next year. Realtor.com notes that the inventory (homes available for purchase) shortage began to soften in February. New construction and rising prices should bring more homes, both new and old, on to the market in 2014, helping inventory return to traditional levels.
Smart Tax Moves Homeowners Should Make Before 2013 Ends Erin Carlyle Erin Carlyle Forbes Staff
2. Mortgages Will Be Easier To Get
“The silver lining to rising interest rates is that getting a loan will be easier,” says Lantz. “Rising rates means lenders’ refinance business will dwindle, forcing them to compete for buyers by potentially loosening their lending standards.”
3. Fewer Homeowners Will Be Underwater
Rising prices helped 2.5 million homeowners with underwater mortgages regain positive equity status during the second quarter of 2013, according to Realtor.com. By Q3, a CoreLogic report found that about 6.4 million homes were still in negative equity at the end of Q3. Watch for that number to shrink in 2014.
4. Foreclosures Will Fade
The once booming foreclosure market has slowed, with September 2013 the 36th straight month of year-over-year decreases in foreclosure activity, nearly 33% down from the end of 2012. The declines should continue with the overall housing recovery.
5. Home Buying Process Less Crazed
During the bust, investors bought as many as one out of every five homes in America, according to Redfin. The perfect storm of increased inventory, higher prices, and fewer foreclosures means that investors are stepping out of the buying market, giving way for regular folks. Add to that the loosening credit rules, and the housing buy market begins to look more normal. “All in all, more inventory, less competition from investors, and more mortgage credit should all make the buying process less frenzied than in 2013,” says Kolko of Trulia.
1. More Homes Will Be Available
Short supply drove rapid price increases at the beginning of 2013, but watch for that to change next year. Realtor.com notes that the inventory (homes available for purchase) shortage began to soften in February. New construction and rising prices should bring more homes, both new and old, on to the market in 2014, helping inventory return to traditional levels.
Smart Tax Moves Homeowners Should Make Before 2013 Ends Erin Carlyle Erin Carlyle Forbes Staff
2. Mortgages Will Be Easier To Get
“The silver lining to rising interest rates is that getting a loan will be easier,” says Lantz. “Rising rates means lenders’ refinance business will dwindle, forcing them to compete for buyers by potentially loosening their lending standards.”
3. Fewer Homeowners Will Be Underwater
Rising prices helped 2.5 million homeowners with underwater mortgages regain positive equity status during the second quarter of 2013, according to Realtor.com. By Q3, a CoreLogic report found that about 6.4 million homes were still in negative equity at the end of Q3. Watch for that number to shrink in 2014.
4. Foreclosures Will Fade
The once booming foreclosure market has slowed, with September 2013 the 36th straight month of year-over-year decreases in foreclosure activity, nearly 33% down from the end of 2012. The declines should continue with the overall housing recovery.
5. Home Buying Process Less Crazed
During the bust, investors bought as many as one out of every five homes in America, according to Redfin. The perfect storm of increased inventory, higher prices, and fewer foreclosures means that investors are stepping out of the buying market, giving way for regular folks. Add to that the loosening credit rules, and the housing buy market begins to look more normal. “All in all, more inventory, less competition from investors, and more mortgage credit should all make the buying process less frenzied than in 2013,” says Kolko of Trulia.
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