2013 may be best year for housing since 2007
Housing starts jump 28% in 2012, the government says, but remain well below long-term averages. Apartment construction leads the way. Single-family construction will be strong in 2013.
Analysts said the report signals that the housing recovery has momentum going into 2013. Assuming, of course, that the debt ceiling battle doesn't derail the economy.
The December gains reached a seasonally adjusted 954,000 units, up from November's 851,000 units and nearly 37% from December 2011's 697,000 units.
Starts were helped by mild weather in December and the start of reconstruction on the East Coast after Superstorm Sandy, economists said.
Here are five more things to learn from the Commerce Department report.
- The United States might see 1 million housing units started in 2013. The last time that happened was in 2007, when starts totaled 1.36 million units. The Commerce Department estimated 780,000 housing units were started in 2012, up 28.1% from 2011. Starts would have to grow about 22% in 2013 to reach 1 million units. It's happened before. In 1983, starts jumped 60% after four straight years of decline.
- Apartment construction is still powering the recovery. That suggests there's still wariness about buying new homes, particularly in the Northeast and the West. Apartment starts were up 39.5% in 2011. Single-family starts were up 24.4%.
- Single-family building permits suggest steady growth ahead. Building permits are a more reliable housing measure because they are indications of real intent to build. Single-family permits are probably the best gauge of the state of the single-family housing market. Permits increased 1.8 % to a 578,000 rate. That's the highest since June 2008.
- Housing should give the economy a boost. Residential investment is on track to rise at close to a 20% annual rate in the fourth quarter of 2012, Jim O'Sullivan, chief economist at High Frequency Economics, wrote clients on Thursday. That could add as much as a half percentage point to U.S. fourth-quarter growth.
- The housing market is nowhere near a bubble. Starts have averaged about 1,470 million units since 1959. So 2012, while welcome, was still a weak year by historical standards. The 2012 starts are still 47% below that long-term average and 62.3% below the 2008 peak of 2.07 million units.
Housing stocks were higher on the news, led by PulteGroup (PHM), Lennar (LEN) and Toll Bros. (TOL). The Philadelphia Housing Sector Index ($HGX) added 4 points to 186. The index is up 8.4% this month.
More on Money Now
- Man secretly outsources own job
- More coeds seek 'sugar daddies' for tuition help
- US may become largest oil producer in 2013
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 shed less than a point, ending the week higher by 1.3%, while the Dow Jones Industrial Average (+0.1%) cemented a 1.7% advance for the week. High-beta names underperformed, which weighed on the Nasdaq Composite (-0.3%) and the Russell 2000 (-1.3%).
Equity indices displayed strength in the early going with the S&P 500 tagging the 2,019 level during the opening 30 minutes of the action. However, ... More
More Market News
As geopolitical tensions threaten to spin out of control, investors are wondering how best to position their portfolios for the global turmoil.
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'