Sunday, June 17, 2018
Business

March housing starts pass 1 million mark

WASHINGTON — U.S. home builders passed the 1 million mark in March, the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.

The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.

Apartment construction, which tends to fluctuate sharply from month to month, led the surge. It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.

By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February's pace of 650,000, the fastest since May 2008.

March's pace of homes started was nearly 46 percent higher than in the same month in 2012.

Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000 from February's rate of 939,000, which was also nearly a five-year high.

The jump in home building is expected to contribute to economic growth in 2013 for a second straight year — a reversal from 2006 through 2011, when it held back the economy.

Deutsche Bank predicts that home construction will reach an annual pace of 1.2 million by year's end. Brett Ryan, an economist at Deutsche Bank, said that rate could add half a percentage point to 2013 growth, which would be the biggest contribution from housing since 2004.

The housing recovery could spur an additional percentage point of growth by encouraging more consumer spending, Ryan said. More building and higher home sales mean Americans will likely spend more on things like furniture and landscaping. Higher home prices also create a "wealth effect" that gives homeowners the confidence to spend more.

Housing construction fell 5.8 percent in the Northeast but gained in the rest of the country, led by a 10.9 percent rise in the South. It rose 9.6 percent in the Midwest and 2.7 percent in the West.

Construction firms have stepped up hiring in recent months, adding 18,000 jobs in March and 169,000 since September, according to the Labor Department.

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 statistics from the home builders.

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