Housing starts and building permits are are up in January according to the Census Bureau. New home construction is one of the major indicators from the real estate industry as to how well the economy is doing, and certainly an increase in housing starts is a very positive sign for the economy. These housing starts, as reported by CNNMoney, rose to a 699,000 annual rate, which is a 1.5% improvement over December and 10% better than a year ago. Building permits are up an impressive 19% over the previous year as well. These results for 2011 even surpassed most expert forecasts.
New homes construction typically picks up as the inventory of existing/pre-owned gets low. With the rise in foreclosures during the worst of the economy, the market was flooded with inexpensive resales. As the supply of existing homes for sale dropped off and unemployment decreased, demand for homes started to climb, so in stepped the builders to fill the demand.
The strong start for new home sales and starts in 2012 certainly is a welcome site for real estate professionals and a clear indication that the market, and the economy as a whole, is heading in the right direction.