Homes were built in September at their fastest pace in the last 17 months, according to a report in USA Today, but while this should help boost economic growth and create jobs it’s still too early to say if it signals a recovery.
Most of the homes built were apartment buildings. Single-family homes, which accounts for 70% of those built, only increased very slightly, while building permits fell to a five-month low. According to the Commerce Department, the annual rate of privately owned homes started last month was 658,000. This represents a 15% increase on August, but is only slightly more than half the 1.2 million needed for a healthy property market.Analysts are cautious about this news, as though it appears favorable they would be more optimistic if work on single-family homes had increased. As it was, this sector increased by just 1.7%, but construction of new apartments increased by 53.4%.
New homes represent a small but significant sector of the property market as the National Association of Home Builders has estimated each new home creates three jobs for 12 months, generating around $90,000 in taxes. Sales of new homes dropped in August to an annual rate of just 295,000 which is a six-month low, and it’s looking as if this could be the worst year for construction since government records began.
The outlook for the general housing market remains grim, as statistics just released by CoreLogic show homeownership rates are down by nearly 10% amongst prime buying groups which are 25-34 and 35-44, when rates for 2010 are compared against rates for 1980. It also found that US consumers are continuing to allocate more of their household expenditure on housing, leaving them less to spend on other consumables. Those who are spending are holding out for bigger discounts and more incentives on major purchases such as cars.