Residential building starts are on the rise with new home construction increasing to a five-month high last month.
Housing starts, or the number of new homes being built, rose 0.3 percent in September to a seasonally adjusted annual rate of 610,000. This may sound insignificant but considering that the expected rate of housing starts was 579,000, the increase is seen as very optimistic and good news for the real estate market. In fact, it was the largest number of new homes being built in five months and marked a 4.1 percent increase (year-over-year) from September 2009.
This is generating even more of a buzz that the real estate market is stabilizing. Many analysts are welcoming the slow improvement in the market which is an indicator for long-term health in the industry versus the booms and busts that we've experienced in the last decade.
Speculation about the future of new housing is a little less optimistic given that building permits have decreased. However, I'm not overly concerned about this given that estimates are an inexact science and sales have see-sawed during the past year as government incentives have generated interest and then expired and as the economy continues its slow and steady recovery.
However, builders this month were optimistic. The National Association of Home Builders/Wells Fargo's confidence index released just this week rose to the highest level in four months. KB Home last month reported a smaller third-quarter loss as revenue increased for them for the first time in almost four years. KB has been cutting costs amid the slump in sales and is seeking to lure buyers with houses that are smaller and less expensive than older designs.
Analysts don't know what to think as builders are having small victories and the industry continues to trot along at a steady pace. As mentioned, building starts are up but building permits are down. What is one to think? This article from BusinessWeek.com talks about just that: how analysts are divided between predicting 2011 gains and losses for homebuilders. What way will the market go? We still don't know.
Read more about "More optimism in the national - and Phoenix - housing market," at MyPhoenixmls.com
Comments(0)