March housing starts surpass 1 million

Availability of approved land cited as a limit




Local angle

In the three months ending in March, there were 403 permits issued to build single-family apartment units in Vancouver and unincorporated parts of Clark County. It was more than four times the 90 permits issued to build apartment units during the same three-month period in 2012, according to records kept by city and county building departments.

WASHINGTON — U.S. homebuilders broke the 1 million mark in March for the first time since June 2008, signaling continued strength for the housing recovery as the spring buying season starts.

The overall pace of housing started rose 7 percent from February to March, to a seasonally adjusted annual rate of 1.04 million units, 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 house building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. February's pace was 650,000, the fastest since May 2008 and a sharp 5.2 percent higher than the government had previously estimated.

Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000; February's rate of 939,000 was also nearly a five-year high.

Scott Laurie, president of Olson Homes, said the falloff in single-family starts reflects a scarcity in ready-to-build land that 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.

He said Olson's construction starts are on pace to climb at least 40 percent this year, as it moves to add as many as eight new communities of Southern California houses priced roughly from $325,000 to $750,000.

Homebuilding 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.

Deutsche Bank predicts that housing construction will reach an annual pace of 1.2 million units by year's end. Brett Ryan, an economist at Deutsche Bank, said that rate could add 0.5 of a percentage point to 2013 growth. That would be the biggest contribution from housing since 2004.

The housing recovery could spur an additional percentage point of growth by encouraging more consumer spending, Ryan said, beginning with things like furniture and landscaping. Higher housing prices also create a "wealth effect" that gives homeowners the confidence to spend more.

Steady job growth, near record-low mortgage rates and rising housing values have encouraged more people to buy housing. In response to higher demand and a low supply of available housing for sale, builders have stepped up construction.

March's pace of homes started was nearly 46 percent higher than in the same month in 2012.

And construction firms have stepped up hiring in recent months. They added 18,000 jobs in March and 169,000 since September, according to the Labor Department.

Each housing unit built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.