Housing starts, including apartments, rose 1.5 percent in January to an annual pace of 699,000, the Commerce Department reported. About 750,000 total new housing units -- 480,000 single-family and 270,000 multifamily -- will be started this year, up 23 percent from last year, and below the 2 million pace in 2004 and 2005, Dales said.
Homebuilder Confidence Improves
Homebuilder confidence improved in February to the highest level since May 2007, according to the National Association of Home Builders/Wells Fargo sentiment gauge. Ninety-eight metropolitan markets had improving conditions for homebuilders, according to the group's index, including Detroit, Miami and Minneapolis.
"The trend is up, not down," said Dean Maki, chief U.S. economist at Barclays Capital Inc. and a former Federal Reserve researcher. "That is a big change from where we've been over the last several years. So I don't think we're going to get to a point over the next year or two where homebuilders and others think these are really good times in the housing market. We're a long way from that. But what we are seeing is some improved trajectory."
While existing home sales are mostly "a transfer of assets from one household to another," new home construction is a direct contributor to economic growth, said Karl E. Case, co- creator of the S&P/Case-Shiller property-value indexes. Each increase of 100,000 housing starts adds about $25 billion to the economy, estimates Case, professor emeritus at Wellesley College in Wellesley, Massachusetts.
New Tax Revenue
Each new house creates about three yearlong jobs and more than $89,000 in new tax revenue, according to the National Association of Home Builders.
KB Home, the seventh-largest U.S. builder by revenue, has begun to raise prices and reduce incentives at some of its 39 communities in Southern California, even as prices on existing homes continue to drop, said Steve Reffner, president of the Southern California region for the Los Angeles-based builder.
The new homes compete with lower-priced existing houses by offering construction warranties and energy-efficient features such as solar-energy panels and insulation that come with tax credits and cut monthly utility bills by as much as 80 percent, Reffner said.
'At the Bottom'