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REAL ESTATE

Rise in U.S. home building suggests turnaround

 

At last, the housing industry may have reached a turning point, say analysts.

A surge in apartment construction gave home builders more work in November. And permits, a gauge of future construction, rose largely because of a jump in apartment permits.

Some analysts say the gains, though coming off extremely low levels, suggest the depressed housing industry may have reached a turning point.

Economists now say 2011 will be the first year since the Great Recession began in 2007 that home construction will have helped the economy grow. Before this year, the industry endured two of the worst years ever.

“Homebuilding is through the worst and is now steadily improving,” said Paul Diggle, a property economist at Capital Economics.

Builders broke ground on a seasonally adjusted annual rate of 685,000 homes in November, a 9.3 percent jump from October, the government said Tuesday. It’s the highest level since April 2010.

Still, the rate is far below the 1.2 million homes that economists say would be built each year in a healthy housing market.

Construction of single-family homes rose 2.3 percent in November to a seasonally adjusted annual rate of 447,000. Apartment construction jumped 32 percent to a rate of 238,000 units. Single-family homes account for about 70 percent of homebuilding.

Builders in South Florida are dusting off their cranes as well, with several new condo and apartment projects in the works. Sensing increased international demand, condo developers are expected to build more than 20 new condo towers in the coming years, according to Bal Harbour-based Condo Vultures. And as more homeowners revert to renting due to the region’s foreclosure crisis, a tightenting apartment market has led to new proposals for multifamily projects. Between government-subsidized affordable housing complexes and private rental communities for seniors and middle-income familes, there are more than 5,000 apartment units set to hit South Florida’s market in the near future.

Nationwide,for the year, work is expected to have begun on 430,000 single-family homes and 185,000 apartments. Those figures remain far below the roughly 840,000 single-family homes and 360,000 apartments that would be started in a healthy economy.

Patrick Newport and Michelle Valverde, U.S. economists at IHS Global Insight, said the better-than-expected figures show that the housing industry is “finally getting off the mat.”

“It’ll keep getting better through next year,” said Jared Franz, an associate economist at T. Rowe Price.

Last year, builders began work on roughly 587,000 homes. That barely surpassed the 554,000 homes started in 2009, the worst year ever.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

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