WASHINGTON (AP) – July 19, 2016 – Construction of new homes posted a solid increase in June, led by a surge of building in the Northeast and the West.
The Commerce Department said Tuesday that housing starts rose 4.8 percent to a seasonally adjusted annual rate of 1.19 million from a revised 1.14 million in May. The June reading was the highest level since February, but was down from 1.21 million a year earlier.
Construction of single-family homes rose 4.4 percent to 778,000.
Home construction jumped 46.3 percent in the Northeast and 17.4 percent in the West.
During the housing boom of the mid-2000s, housing starts sometimes ranged above a 1.7 million annual rate. In the bust that followed, they fell below 600,000. Over the past year, they have mostly stayed between 1.1 million and 1.2 million. Builders this year have been eager to put up more single-family houses, a switch from recent years when they focused more on apartments.
Super-low mortgage rates and a growing job market have encouraged home buying. The average 30-year fixed-rate mortgage ticked up 3.42 percent last week, staying close to its all-time low of 3.31 percent in November 2012.
"This morning's report was quite upbeat," Neil Shankar, U.S. regional economist at TD Economics, wrote in a research note. "Continued job creation coupled with rising wages and low interest rates bodes well for a broader rebound in housing demand as well as consumer spending."
Builders completed work last month on nearly 1.15 million homes at a seasonally adjusted annual rate, highest since September 2008. Completions of apartments and condominiums – buildings with more than five residential units – reached 386,000, highest since February 1989.
Homebuilders remain confident about the outlook for the new-home market, according to a survey released Monday. The National Association of Home Builders/Wells Fargo builder sentiment index dipped to 59 this month from 60 in June. But readings above 50 indicate that more builders view sales conditions as good, rather than poor.
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