WASHINGTON — U.S. homebuilders broke the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.
The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.
Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.
By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 percent higher than it had previously estimated.
Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.
Scott Laurie, president of Olson Homes, said that last month’s falloff in single-family starts is not representative of what’s happening in the market.
A scarcity in ready-to-build land has many builders working to get local governments to approve new land for construction, he said. The process can take 12 to 18 months. A survey of homebuilders released Monday noted similar concerns.
“You’ll see starts will continue to increase as the year goes on and new projects start to open up,” Laurie said.
Laurie’s company builds homes in Southern California priced roughly from $325,000 to $750,000. He says Olson’s construction starts are on pace to climb at least 40 percent this year, as the builder moves to add as many as eight new communities.
“The market started showing improvement in the early part of 2012 and really hasn’t slowed down since,” said Laurie. “Right now, were very bullish.”
The jump in home building is expected to contribute to economic growth in 2013 for a second straight year — a reversal from 2006 through 2011, when it held back the economy.