Builders broke ground on more homes last month as permits for new construction surged to their highest level since 2008, yet more evidence that the housing market recovery is gaining traction. New home construction rose almost 1% month-over-month to a rate nearly 28% above figures reported a year ago.
Meanwhile, building permits climbed almost 5% over last month’s numbers, and are nearly 34% ahead of figures reported this time last year. Strong permit data bodes well for the spring building season, and could help stimulate the broader economy, experts say.
After six years of deep slumber the market is awakening. We are about to housing enter a bull market reminiscent of most post-recession recoveries.
That enthusiasm though comes on the heels of some disappointing news on the homebuilder confidence front, which showed that builders have become increasingly negative about market conditions in recent months. Builder confidence fell for the third consecutive month in March, after posting eight months of strong gains.
Although many builders are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots, along with rising costs for building materials and labor. At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals.
Despite the obstacles, the homebuilding sector added to economic growth for the first time since 2005 last year, and housing starts numbers add further credence to the notion that the housing market is finally gaining some ground after a historic meltdown.
Still, a Federal Reserve meeting this week is expected to address persisting doubts about the labor market outlook, a key factor in housing demand. Although the economy added almost 240,000 jobs in February, plans for the Fed to buy an additional $85 billion per month in bonds, is expected to move forward until the labor market improves more significantly