The new home construction industry was among the hardest hit, but with continued signs of improvement, housing is in for a positive 2013, although getting to pre-recession normals will take years.
New home construction surges
According to the U.S. Census Bureau, housing starts in December rose 12.1 percent compared to November, and an astounding 37 percent compared to December 2011, marking improvements in one of the hardest hit sectors in the American economy, led by single-family housing units which rose 8.1 percent for the month. New home construction picked up in December as the Eastern seaboard began picking up the pieces and rebuilding after Superstorm Sandy destroyed homes in a historic natural disaster, seeing a 19 percent increase in housing starts for the month.
Housing starts did much better in December than most economists had forecast, which is the reason that in recent months, builder confidence levels have not slid backwards, as more builders feel optimistic about sales conditions.
Housing completions rose 1.6 percent in December compared to November, and ended the year at 13.2 percent higher than December 2011. Single-family housing completions were a full 3.7 percent higher in December than November.
New home construction permits up 29 percent in one year
Another hopeful sign for the sector is an increase of 0.3 percent in building permit authorizations in December when compared to November, and a healthy 29 percent increase compared to December 2011. Building permit volume is a forward looking indicator closely watched as a predictor of upcoming starts and completions, and with these numbers, a positive spring is in store for the new home construction industry.
At AGBeat, we have long asserted that the housing recovery will be a slow march, not an overnight spike, and while this news is all positive, it must be stated that getting back to pre-recession levels will most certainly not happen overnight, particularly when economic uncertainty persists in light of the political theater in D.C.
The National Association of Home Builders’ Chief Economist, Dr. David Crowe noted in a recent statement that the sector is not out of the woods yet. “Persistently tight mortgage credit conditions, difficulties in obtaining accurate appraisals and the ongoing stalemate in Washington over critical economic concerns continue to impede the housing recovery.”