Home construction sees best year since 2008
WASHINGTON (AP) -- U.S. builders started work on homes in December at the fastest pace in 412 years and finished 2012 as their best year for residential construction since the early stages of the housing crisis.
The Commerce Department said Thursday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That's 12.1 percent higher than November's annual rate. And it is nearly double the recession low reached in April 2009.
Construction increased last month for both single-family homes and apartments. And the pace in which builders requested permits to start more homes ticked up to a 4 1 2 year high.
For the year, builders started work on 780,000 homes. That's still roughly half of the annual number of starts consistent with healthier markets. But it is an increase of 28.1 percent from 2011. And it is the most since 2008 -- shortly after the housing market began to collapse in late 2006 and 2007.
Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped boost sales and prices in most markets. That has persuaded builders to start more homes, which adds to economic growth and hiring.
The positive housing report, along with a steep decline in unemployment benefit applications, contributed to a strong day on Wall Street. The Standard & Poor's 500 gained eight points to close at 1,480, a five-year high. The Dow Jones industrial average ended the day up 84 points at 13,596. The Nasdaq composite rose 18 points to 3,136.
"There is no denying that the housing market recovery is solidifying, and we expect construction activity to ramp up to the 1 million annualized threshold by the end of this year," said Michael Dolega, an economist with TD Economics, in a note to clients.
Dolega said the gains in home building helped boost construction hiring in December by 30,000 jobs -- the most in 15 months. He predicts the construction industry could add half a million jobs in 2013.