Total housing starts increased 6.9 percent in June from May to a seasonally adjusted annual rate of 760,000 — the highest rate since October 2008, according to the Commerce Department.
Groundbreaking for single-family homes, which are the largest part of the market, rose 4.7 percent, while multifamily home starts rose 12.8 percent. Builders pay more attention to the pace of construction for single-family homes, since the multifamily homes segment of the market tends to be more volatile.
The pick-up in construction coincides with the highest homebuilder confidence in five years and bolstered stock prices for building companies. The stocks of the 13 US builders with publicly traded shares have increased an average 60 percent this year. By comparison, the Standard & Poor’s 500 stock index is up about 9 percent.
“We’ve been hoping for this for a long time,” Celia Chen, a housing economist at Moody’s Analytics, told The Associated Press. “It looks like things are turning.”
Home construction has yet to make a full recovery, though; June’s seasonally adjusted annual rate of 760,000, while a 3.5-year high, is only about half the 1.5 million annual rate that economists consider healthy.
Economists at consulting firm IHS Global Insight predicted that housing starts will not reach 1.5 million a year until 2015, The Associated Press reported. At the current lower levels, home construction will likely have only a modest effect on the overall economy.