The U.S. Census Bureau reported that the number of housing permits issued in October increased 17.7 percent compared to a year earlier. This news would point to an annual construction rate of 653,000 housing units.
Home builders estimate that each new home creates three jobs, so the pickup in construction could be welcome news on the unemployment front as well.
Multi-family units are showing the most strength. Almost 30 percent of housing construction projects started in October were apartment buildings. These projects include at least five housing units.
Construction of apartments has doubled over the past year. In 2010, apartment construction represented about 18 percent of the market. In the most recent report it represents 30 percent of construction activity.
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This is consistent with the foreclosure news. After losing a home, many families will become renters and the market seems to be preparing for them. It is also a sign that builders recognize foreclosures will boost the inventory of single family homes and they are focusing in more profitable segments.
The increase in housing starts confirms the small degree of optimism being expressed by home builders.
The National Association of Home Builders/Wells Fargo housing market index reached its best level n 17 months in November. Readings above 50 are considered bullish. The index is still at a very low level of 20, but it is up from the low of 14 seen in September.
Data generally supports the idea that after large declines in housing, the market has reached a bottom. Recovery may be slow, but it appears that we are finally in the early stages of a housing market comeback.
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