U.S. housing starts jump to 4-year high
New homes go up this past month in in Edmond, Okla. The U.S. Commerce Department said Wednesday, Oct. 17, 2012, that builders broke ground on homes at a seasonally adjusted annual rate of 872,000 in September, 15 percent increase from August. (Sept. 21, 2012) Credit: AP
U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months.
The strong national numbers may not translate to a similar trend for Long Island, said Mitch Pally, chief executive of the Long Island Builders Institute.
The Commerce Department said Wednesday that U.S. home construction rose 15 percent last month to a seasonally adjusted annual rate of 872,000. Single-family construction rose 11 percent to the fastest rate in four years. Apartment building increased 25.1 percent.
Applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.
The national construction rate has increased by more than 38 percent over the past 12 months.
Locally, housing starts have dragged because of long permit approval times and developers' difficulty in getting financing for new projects, Pally said.
"Most of our companies are small to midsized, and their ability to finance projects is predicated on banks' willingness to lend," he said. "So they're much more dependent on financing from outside sources than larger companies may be from other parts of the country."
Nationally, housing starts are now 82.5 percent above the recession low rate of 478,000, hit in April 2009. That's still well short of the 1.5 million that economists consider healthy and far below the more than 2 million built in 2007 -- the peak of the housing boom."This is a good report," said Patrick Newport, U.S. economist at HIS Global Insight. "There is no reason to think that this will not continue going forward."
He also predicts that housing will add about 0.25 percent to overall economic growth this year. If that forecast proves accurate, it will be the first year that housing has been a positive factor for economic growth in five years.
Though new homes represent less than 20 percent of the housing sales 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 National Association of Home Builders.
-- With Lisa Du
