Affordability throughout 2012 prompted a large demand for homeownership, which has resulted in a lower inventory of existing homes. This has provided additional business for builders, and together, the U.S. Census bureau and the Department of Housing and Urban Development reported a notable increase in permits, starts and completions for the month of December.
With a higher demand for new homes, authorizations increased to a rate of 578,000 in December, up 1.8 percent above single-family permits approved in November. When looking at building permits for the entire year of 2012, the annual amount of 813,000 housing units was 30.3 percent above 2011's 624,100.
Meanwhile, the number of privately-owned housing units authorized in December reached an annual rate of 903,00, increasing 0.3 percent from the November rate and up 28.8 percent from a year ago.
Housing starts for single-family estates jumped 8.1 percent to 616,000 in December from 570,000 in November. Private starts jumped 12.1 percent from the month before, while annual housing units in 2012 surpassed figures from 2011 by 28.1 percent, with 780,000 initiated last year.
Buyers have been better able to afford newly-built homes, which are often notably more expensive, as mortgage rates have continued to linger near record-low levels set in late 2012. Lower rates provide lower monthly mortgage payments. while buying when the economy is steadily improving is important.
With increased permits and starts seen throughout last year, the joint report found that privately-owned housing completions rose 1.6 percent to a seasonally adjusted rate of 686,000. This is up 13.2 percent from completions in December 2011. As for single-family housing starts, the annual rate rose 8.1 percent to 616,000 from 570,000 recorded in November.
Builders more confident in housing market
The increase in construction has pushed the National Association of Home Builders' Housing Market Index to its highest level since April 2006, as more builders agree that market conditions are good.
"Conditions in the housing market look much better now than at the beginning of 2012," said Barry Rutenberg, chairman of NAHB. "An increasing number of housing markets are showing signs of recovery, which should bode well for future home sales later this year."
The January level of 47 matched December's index.However, the index could push forward with growth of economic factors and consumer demand in the new year.