US housing market starts increase by 7%

Press release   •   Apr 16, 2013 17:07 BST

Construction of new homes surged last month to the highest level since before the financial crisis, a sign the US housing market's recovery will continue to lift the economy.

Overall housing starts rose 7% from 0.939 million in March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.

This achievement represents the first time since June 2008 that US homebuilders have managed to break the 1 million mark.

The month's figures were driven by a big jump in the construction of multifamily homes, a volatile part of the industry. Construction of homes with at least five units rose approximately 27%.

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

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

Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.

But the news was not all good. The annual rate of building permits--an indicator of future construction--was down 3.9% from February, although still 17.3% above March of 2012.

Economists believe improvements in the housing market will be a bright spot for the moderate economic recovery this year. Investments in residential projects and home improvements have contributed to overall economic growth for seven consecutive quarters.

For more information on the US housing market, see the latest research: US Housing Market

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