The United States Commerce Department said in January that the pace at which home builders broke ground for new homes in December of 2012 was its fastest in more than four years, surging 12.1 percent to a 954,000-unit yearly rate.
The report gave much of the credit for this meteoric rise to December’s multifamily construction increase of 20.3 percent, compared to an 8.1 percent jump in groundbreaking for single-family homes.
Following this news from the Commerce Department, the National Association of Home Builders (NAHB) trumpeted its impact on a strong end to 2012’s housing market, as well as a hopeful start to 2013.
Barry Rutenberg, chairman of the NAHB, attributed this relatively recent spike in home building to razor-thin new home inventory levels, which has builders breaking ground on new housing units proactively in order to meet the usual rise in demand in what he labeled as “the spring buying season.”
An additional reason for optimism in the housing market from the Commerce Department’s report, at least in the near future, is that the number of permits for future housing construction projects sped up enough in December to mark its fastest per-unit pace since 2008. These new construction permits offer a relatively clear vision into the future of home buying and building as a whole.
Grain of Salt: Housing Market Data Notoriously Volatile
Information released about the nation’s housing starts tends to be about as stable as a house of cards. For example, the government’s estimate on housing starts for November of last year was initially reported as 861,000-unit rate, which it revised later to 851,000.
So, since the multi-family unit construction component to this stat is especially volatile, the flowery news about an increased pace in groundbreaking for new construction should be received with the utmost amount of tempered enthusiasm.
A number of analysts and pundits point to these numbers as an indication that the boost in residential real estate construction helped to stimulate the country’s economy as a whole, which is has not done since 2005.
This is filed under Home Buying.