Home construction in the U.S. surged during April and building permits rose to levels higher than in over five years. This was a good sign that the industry is starting to rebound after a slow winter.
Housing starts were up 13.2% for the month of April to an annual adjusted rate of 1.07 million, said the Department of Commerce last Friday.
The bulk of the increase came in the segment of multifamily, which is volatile, however the overall gain was the largest in five months.
New approved building permit applications, a bellwether for future construction, were up 8% in April from March to a rate of 1.08 million reaching its highest point since the summer of 2008.
Friday’s federal report shows that an important piece of the U.S. economy battered by the recession has improved slowly after a slight dip during this past winter, said one CEO of a large construction company out west.
Much current demand for new homes is coming from the upper end purchasers instead of those who are purchasing a new home for the first time.
The average prices for a new home increased in March to $290,000, which is the highest on record, as homebuilders target borrowers who are wealthier.
Many buyers who are first time, who might have credit blemishes, have experienced a hard time being approved for mortgages, so homebuilders have focused on homes that are larger and more expensive.
Builders have had to cope with a housing market that has been soft thus far in 2014. Sales of home that are newly built dropped in March to a level that was its lowest since July 2013, following a severe winter that slowed construction down.
Many people in the industry were encouraged by news this past week Federal Housing Finance Agency’s new chief will make qualifying for home loans easier for more people in the U.S.
In the report on Friday, housing starts rose 26.4% from the same period one year ago. The pace for construction during March was revised down, showing a gain of 2% from the month before, compared to the initially reported increase of 2.8%.
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