Housing starts rise in January as sector slowly recovers

“That said, housing production is still far from what would be considered normal in a healthy market, and many challenges remain for home builders in terms of tight credit conditions, difficult appraisals and the continued flow of foreclosed properties on the market — all of which are certainly slowing the pace of improvement in both housing and the overall economy.”

Construction on multi-family buildings — such as apartments — have helped to offset the decline in starts of single-family homes. Demand has increased for rental property during the protracted housing crisis as foreclosures rose and lending standards tightened. 

Still, single-family sales were revised upward in December to reflect a 12 percent gain over November’s figures — with 513,000 new starts.

Building permits — an indicator of future building —  increased by 0.7 percent to seasonally adjusted annual rate of 676,000 up from December’s revised rate of 671,000, 19 percent above the January 2011.

The majority of those permits — 445,000 — were for single-family homes. 

Builders have been feeling more optimistic in recent months, acknowledging that while the pace of recovery will be slow this year it should accelerate in 2013. 

Until the market can clear the bulk of less expensive foreclosures, sales of single-family homes will likely remain slow. 

In a separate report, the Mortgage Bankers Association said foreclosure and delinquency rates continue to improve, especially through the final three months of last year. 

“Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy,” said Jay Brinkmann, MBA’s chief economist and senior vice president for research and education.

“The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago,” he said. 

Loans that are seriously delinquent are predominantly made up of those that originated prior to 2008 and the pool is shrinking. Also, the improvement in the labor market is the mortgage delinquency rate is actually falling faster than the unemployment rate is declining, Brinkman said.