Houston's Rate Sheet

Home Construction surges in January

Despite rising interest rates, new home construction boomed in January. Blowing economist's estimates out of the water, construction of new homes and apartments was up 14.5 percent from December. Although many believe this increase was due to an unusually warm winter, new permits for construction rose 6.8 percent from December. New permits are considered a leading indicator for future construction. In the report issued by AP, there’s even better news for those of us in the real estate bidness:

Forecasters believe that sales of both new and existing homes will decline slightly this year and prices, which have been surging, will rise but at a slower pace than the double-digit gains seen in much of the country in recent years.

The National Association of Realtors reported today that the slowing in sales that started at the end of 2005 has yet to dampen price gains.

The Realtors found that 72 metropolitan areas around the country reported double-digit gains in median home prices for existing homes sold in the last three months of 2005, compared to the same period in 2004. That was a record level for areas reporting double-digit price increases, besting the old mark of 69. The biggest gain came in the metropolitan area that includes Phoenix, Ariz., where home prices shot up by 48.9 percent.

All of this is great news for the economy. It keeps the construction workers employed and it is an indication that the industry believes demand will continue. It does however mean we can probably see another rate increase by the Fed in the not to distant future.

posted by Vincent Biondillo @ 9:17 AM