Economy Watch: Homebuilding Sees Uptick in January
- Feb 17, 2012
New home construction gained a little ground in January, according to the Census Bureau on Thursday, with U.S. builders breaking ground on dwellings at an annualized rate of 699,000 units, up 1.5 percent since December, and almost as much as during November 2011, which recorded a three-year high. Though the figure is seasonally adjusted, some of the gain can still be chalked up to relatively good weather across the country during January, but the surge was in multifamily starts, which were up 8.5 percent. Single-family starts were down 1 percent.
All together, homebuilders started 609,000 units in all of 2011, which came in as the third-lowest year on record in that regard, and the lowest for single-family homes. On average since 1959, builders have started 1.5 million new residential units each year. The recent low totals are hard luck for workers who formerly made their living in homebuilding, but also an entirely rational response by the industry. Too many homes were built during the peak of the bubble, and it’s taken a long time to burn off that inventory, considering how hard it’s been for buyers to get mortgages, and how many markets have been swamped by foreclosed properties.
In recent years, single-family homebuilders have been building about as many homes as they can sell, and no more. The real residential action lately has been in multifamily construction, with demand for both market-rate and affordable apartments spiking. The Census Bureau’s annual tally of “units built for rent” was up 67 percent year-over-year between 2010 and 2011.
Foreclosures up, delinquencies down
RealtyTrac reported on Thursday that U.S. foreclosure filings—default notices, scheduled auctions and bank repossessions—were up 3 percent month-over-month in January 2012, but still down 19 percent from January 2011. That counts only as an uptick, but the company says that the foreclosure process is beginning to thaw now that the robo-signing settlement has been inked. “The settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year,” noted RealtyTrac CEO Brandon Moore in a press statement.
The rise in foreclosures might have the effect of clearing long-pending cases, but will new delinquencies keep adding to the total? Maybe not, if current trends in delinquencies hold. The Mortgage Bankers Association has reported declining residential delinquencies recently, and on Thursday the organization said that between the third quarter of 2011 and the fourth quarter, the percent of loans in the foreclosure process declined slightly from 4.43 percent to 4.38 percent. All the buckets—30 days, 60 days, 90+ days—were down quarter-over-quarter, except for loans delinquent 30 to 60 days, which was up slightly.
Foreclosures may have driven down the price of housing, but that’s had the salutary side effect of bringing housing affordability to record levels. According to the National Association of Home Builders on Thursday, 75.9 percent of all new and existing homes that traded hands during the fourth quarter of 2011 were affordable to householders making the national median household income, which is $64,200 a year. The percentage has never been that high since the organization began tracking affordability 20 years ago.
Weekly unemployment claims dip to four-year low
The government also reported on Thursday that weekly unemployment claims dropped to their lowest level since March 2008, which technically was at the beginning of the Great Recession, though no one knew that then. Claims fell from 348,000 to 13,000, which was lower than economists expected. The less volatile four-week average fell to 365,250 from the previous week’s revised average of 367,000. Numbers that low probably point to another meaty rise in hiring for February and maybe a drop in the official unemployment rate.
Wall Street generally enjoyed the good news on Thursday—and the absence of bad news from Europe—with the Dow Jones Industrial Average rising 123.13 points, or 0.96 percent. Both the S&P 500 and Nasdaq gained more than 1 percent, with the former up 1.1 percent and the latter up 1.51 percent.