Skip to comments.New Home Construction in March Surges to Highest Level in 7 Years
Posted on 04/16/2013 11:04:58 AM PDT by SeekAndFind
Residential construction shot up significantly in March as homebuilders broke ground on the most multi-family homes in seven years, a report from the Commerce Department showed Tuesday.
Housing starts rose 7 percent from upwardly revised levels reported in February to a seasonally adjusted annual rate of about 1.04 million units, according to the Commerce Department, almost 47 percent higher than levels reported in March 2012.
Construction activity significantly outpaced projections from economists polled by Bloomberg, which put starts closer to 930,000. Starts reported in March also inched toward what economists consider a more normal level of about 1.5 million annual starts.
Builders are scrambling to respond to heightened demand for rental units, which has been credited with most of the gains seen in the housing starts in recent months and boosting broader economic growth.
"Today's report is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development," Rick Judson, chairman of the National Association of Home Builders and a Charlotte, N.C.-based home builder, said in a statement.
But work began on fewer single-family homes in March and permit levels pulled back, making the data a "mixed bag" according to NAHB Chief economist David Crowe, who characterized gains in the homebuilding sector "a continuation of the slow, methodical march forward."
John Tashjian, principal at New York-based Centurion Real Estate partners, says the rift between multi-family and single-family building also exposes the growing divide between the recovery of specific markets versus the broader housing market.
(Excerpt) Read more at usnews.com ...
ALSO SEE HERE:
Construction Sector Offers Silver Lining in Disappointing Jobs Report
The economy added just 88,000 jobs in March, a disappointing reversal given solid gains in January and February, and well below the 193,000 new jobs economists predicted for the month.
But there is one sector that’s heating up, even as other industries suffer the side effects of sequestration and squabbles in Washington: residential construction.
The homebuilding industry, beaten down during the housing bust, is benefiting from the overall tight inventory of homes for sale and the rush of would-be homebuyers to take advantage of record-low mortgage rates. Housing startsaround 917,000 in Februaryare still much lower than the 1.5 million economists say is closer to normal, but still almost 30 percent above construction levels seen this time last year, fueling job creation in the industry.
According to the Bureau of Labor Statistics, residential construction jobs increased almost 4 percent year over year, significantly faster job growth than the overall employment increase of about 1.4 percent.
The trend reflects “that housing is now a critical part of the economic recovery,” Trulia chief Economist Jed Kolko, wrote in a post Friday.
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And for those not afraid of hard work...
Construction Firms Say Labor is Harder to Come By
An industry trade group says there is increasing evidence of a labor shortage
Anyone who watches the job market closely knows that the construction sector has been weak in this recovery. Employment in construction is still down 25 percent from its pre-recession peak, and the industry has a 15.7 percent unemployment rate. So it came as something of a surprise when a trade association representing the construction industry announced that it was experiencing a growing labor shortage.
In its most recent survey of its members, the National Association of Home Builders found that labor shortages have grown across a variety of positions and professions since June 2012. For example, 38 percent of firms currently report “some shortage” of carpenters for rough work, up from 24 percent June 2012. Meanwhile, only 57 percent report no shortage, compared to 71 percent in June. And 23 percent reported some shortage of roofers, up from 14 percent in June 2012. A similar trend holds, to varying degrees, across many other construction-related occupations, including electricians, bricklayers, plumbers and workers in framing crews. While these figures may indicate a strengthening industry, they also could signal future constraints on growing firms looking for workers.
“It’s highest in categories of carpentryrough, finished, framingbut the thing that really stands out is that the trend is just consistently upward,” says Paul Emrath, an economist at NAHB.
With a construction job market still reeling from the bursting housing bubble and subsequent recession, it seems counterintuitive that there should be a shortage of construction workers. Rather, one would think that all of those workers forced out of their jobs during the downturn would now be flooding firms with job applications.
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Ha. -Of RENTAL UNITS.
Nobody can afford to buy a house.
when my taxes (somehow I paid a higher % than BO) can pay for people to sit on their collective asses?
RE: The building boom is in multi unit, not single unit housing. This indicates a strong demand now, and in the foreseeable future in rentals.
Very good observation.
My daughter is a construction loan administrator at the New York Community Bank and she does observe a uptick in multi-unit construction in the last 6 months.
People aren’t ready to buy now, but they’ve got to live somewhere, and the multi-unit housing is the place to go...
Constructors also have the incentive to start building due to historic low interest rates.
Well, Let’s look at the salaries of construction workers.
Electricians for instance are paid on average $25.00 an hour here.
Plumbers are paid on average about $25 to $26 per hour.
Brick Layers are paid ion average $23/hour
Isn’t that better than sitting on your ass?
The low interest rates are the icing on the cake. Unfortunately, builders will build as long as banks will lend money to fund the construction - that is why there is such a glut in single family homes (both on the market and in shadow inventory - REO or otherwise). The same is happening in MF right now. MFU's at least have the POTENTIAL to generate cash flow immediately, but the current rate of occupancy for apartment complexes is dropping due to the increased availability of units. Cash flow is being destroyed as a result. Developers and builders beware!
Mrs. Gamecock and I are in the process of building a house, our first.
Because of my job it never made sense to buy, but I have a new found stability so we are taking the plunge
Who can afford to rent? To rent my house, it would cost me $1500 a month more than my mortgage.
RE: Because of my job it never made sense to buy, but I have a new found stability so we are taking the plunge
What this economy needs is MILLIONS MORE LIKE YOU.
And to whom are they going to sell them to?
Low income housing, the tax payers are probably funding for the politically connected.
HA...the government....Section 8 housing
RE: And to whom are they going to sell them to?
According to the article:
:...solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market.”
My conclusion that this multi-family expansion is mainly due to Section 8 Housing, the name eschewed by the government in favor of ‘housing vouchers’...
It is the modern day replacement for LBJs Great Society aftermath where the government made every local in the country create ‘government housing’ - the projects.
These projects - public housing - have largely been abandoned to more effectively disperse the lowlifes to where worthwhile people live. The tenant pays 25% of their spendable income (not a whole hell of a lot for a loser on EBT, TANF, EITC, WICs, etc. - not taxable and doesn’t count), the government picks up the rest of the rent.
Obama has upped the ante, and just created more public housing, but we can’t call it that...the single family housing recovery IS NOT.
Chinese investors are buying up a lot of rental properties in bulk.
They are building more multi-unit residences to meet a growing rental market. Fewer people can qualify for home loans.
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