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Housing starts increased in March, but still low

by Jorge Hernandez on April 19, 2011

More new homes are being built and more building permits were issued in March, according to a government report on April 19.

The number of constructions starts on new U.S. homes increased by 7.2 percent to an annual rate of 549,000, compared to 512,000 in February. The Commerce Department revised February numbers from an original estimate of 479,000. The expected number of starts for March was about 520,000 so the final annual rate turned out to be even higher than predicted.

The number of permits for new homes, a predictor of housing demand in the future, according to MarketWatch, also increased in March. Single-family home permits increased by 5.7 percent last month, making up more than 75 percent of all permits. Total new construction permits increased from 534,000 in February to an annual rate of 594,000 in March.

These growing numbers are positive news but the Associated Press puts them in context.

Economists consider a healthy housing market to grow at an annual rate of about 1.2 million homes per year, according to the news organization.

"Housing starts remain at an extraordinarily depressed level. To put this in further perspective, a doubling of [new homes] from here would still put starts at the lowest level of any other recession," Dan Greenhaus, chief economic strategist at Miller Tabak + Co., told the news source.

According to the AP, economists are predicting decreases in 2011 home prices before recovery sets up.

The increase in permits "could signal a turnaround in the coming months," according to Steven A. Wood of Insight Economics. The usual time for construction of new homes is about 6 months.

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