US housing up 1.5% in August

WASHINGTON – HOUSING construction rose in August to the highest level in nine months as a big surge in apartment building offset a decline in single-family activity.

The August performance was another sign that the US housing industry has begun to recover from its worst downturn in decades.

The Commerce Department said Thursday that construction of new homes and apartments rose 1.5 per cent to an annual rate of 598,000 units last month. That is slightly lower than the 600,000-unit pace that economists had forecast.

The increase pushed building activity to the highest level since last November and left home construction 24.8 per cent above the record low hit back in April.

Applications for building permits, a good forecaster of future activity, posted a 2.7 per cent rise in August to an annual rate of 579,000 units, slightly below the 580,000 level that had been forecast. Permits for single-family homes dipped by 0.2 per cent while multifamily units rose by 15.8 per cent.

The 1.5 per cent rise in housing starts followed a small 0.2 per cent dip in July. The August strength came from a 25.3 per cent surge in construction of multifamily units, a volatile sector which had fallen by 15.2 per cent in July.

The larger single-family sector dipped by 3 per cent last month to an annual rate of 479,000 units, the first setback following five straight monthly gains.

By region of the country, construction shot up by 23.8 per cent in the Northeast and 0.9 per cent in the Midwest. Activity was flat in the West and fell by 2.4 percent in the South.

Builders slammed the brakes on construction after the housing bubble burst following five consecutive boom years. The weakness in housing spread to the financial sector as defaults on home mortgages soared. This all contributed to pushing the country into the worst recession in seven decades. Economists believe the overall downturn has ended as well.

Builders have been ramping up because buyers want to take advantage of a new federal tax credit for first-time homebuyers. It covers 10 per cent of a home price up to US$8,000 (S$11,333), and is set to expire at the end of November. — AP

Source : Straits Times – 17 Sep 2009