New Home Construction Up In May And Permits Are Highest Since 2008 [View all]
A sign that the economy is improving is that new home starts increased 3.2% in May and applications for permits for new homes and apartments increased 7.9% and are at the highest level in since September 2008. The Census Bureau released the May data this morning.
The government also said April was much better for housing starts than first thought. The government revised the April starts to 744,000 — up from an initially reported 717,000 and the fastest building pace since October 2008.
Although single family housing starts were up 4.8% in May and 28.8% over last year, total starts were down because new apartment starts dropped in May. Month to month variations in apartments starts are normal because it takes longer to get an apartment project out of the ground than a single family home. What is important is the trend, and the trend has been up for three months.
Permits for ne construction increased to a seasonally adjusted rate of 780,000 — the most since September 2008. This shows that builders and developers are optimistic about the future. Although 780,000 is half what economists would like to see, it is far larger than the months during the recession when the home building virtually stopped.