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07-17-2009
New residential construction may be showing signs of new life. U.S. housing starts unexpectedly rose for the second month in a row, increasing 3.6 percent in June, the U.S. Commerce Department announced Friday.
Housing starts rose to a 582,000-unit, seasonally adjusted, annual rate in June. It's the highest level of starts since November 2008. Economists surveyed by Bloomberg News had expected housing starts to total a 530,000 annualized rate in June. Housing starts totaled a revised 562,000-unit rate in May, and 458,000 in April.
In addition, starts of single-family homes jumped 14.4 percent in June to a 470,000-annualized rate. Also, building permits, an indicator of future housing construction, increased 8.7 percent to a 563,000 annualized rate.
Building permits in the Northeast rose 5.4 percent; Midwest, 3.4 percent; South, 13.9 percent; and the West, 1.9 percent.
Jonathan Basile, an economist for Credit Suisse Holdings in New York, said new home building doesn't qualify as a 'green shoot' yet, but it's getting close.
"There are some good signs," Basile told Bloomberg News Friday. "Home building is stabilizing at a low level."
Economists follow the housing start statistic because of the large role residential real estate has played historically in the U.S. economy. Housing affects commerce in companion sectors, such a s furniture, appliances, insurance, and landscaping, among others. Hence, a sustained increase in housing starts usually puts upward pressure on U.S. GDP.