New Home Construction Climbs to Surprising Four Year High

Monday, November 26, 2012

Evidence of a construction industry revival is was present in October when new-home construction rose to a four-year high. Housing development rose 3.6 percent to an annual rate of 894,000, the fastest since July 2008, according to the Commerce Department in Washington. A group of 82 economists called a median forecast for an 840,000 annual rate pace. Construction permits for single-family homes also climbed to their highest in four years.

Mortgage rates are at a record-low with a lower risk that property values will continue to decline, making real estate more attractive to home buyers, boosting the economy and benefiting real estate developers. The Federal Reserve is buying $40 billion per month in housing debt to maintain stable borrowing costs. According to Federal Reserve Chairman Ben Bernanke, the industry will be a “source of economic growth.” With consistent growth, construction will continue to contribute heavily to the U.S. economic recovery.