Builders ready for home construction rebound

@CNNMoney March 20, 2012: 9:37 AM ET
Builders are anticipating a strong housing construction season.

Builders are anticipating a strong housing construction season.

NEW YORK (CNNMoney) -- Home builders are getting ready for a stronger construction season, filing for the most building permits in more than three years, in another sign of recovery in the long-battered housing market.

The government reported builders filed for permits at an seasonally adjusted annual rate of 717,000 in February, the strongest reading since October 2008, which was the month after the meltdown in financial markets. It marked a 5.1% rise from January and a 34.3% increase from year-earlier levels.

Actual starts of new homes slipped slightly from a very strong start to the building season in January, down 1.1% to 698,000. Still, that was 35% ahead of starts in February 2011.

The starts are more affected by weather factors. But the permits are generally seen as an indication of builders' confidence in the market and the demand they are seeing. Mortgage rates near record lows and an improving jobs market both are feeding stronger demand.

The construction and permitting of apartments and condos continue to be particularly strong. Permits for buildings with more than one housing unit rose 61% from prior-year levels, and starts of buildings with five or more units jumped 29% from January and were more than double year-earlier levels.

Watch for a housing recovery

New home construction is still only a fraction of levels during the building boom in the middle of the last decade. But years of low building since the housing bubble burst have left inventories of new homes for sales at a record low, helping to spur more activity by builders.

Stocks of major home builders such as PulteGroup (PHM, Fortune 500), D.R. Horton (DHI, Fortune 500) and Toll Brothers (TOL) have all posted double-digit gains in the last three months. Home supply retailers such as Home Depot (HD, Fortune 500) and Lowe's (LOW, Fortune 500) have also reported strong sales and profits, and their stocks have rallied as a result.

Boost your odds of landing a mortgage

The home construction industry is an important driver of the overall economy, creating demand not only for construction workers but also manufacturers of various goods used in new homes, from major appliances to furniture to general housewares.

That's one of the reasons that housing and home construction have historically helped to lead the U.S. economy out of downturns. So the strong hopes for the building season ahead are seen as good news for the broader economy as well. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
View rates in your area
Find personalized rates:
Find Homes for sale
  • Property Type
  • Find a home in:
    New York | Atlanta | Chicago | Los Angeles
    Washington D.C | Houston | Philadelphia | More options

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.