New Home Constructions Jumps 22% From Last Month

New Housing Construction Report:

The number of new housing projects that builders broke ground on in February rose sharply, defying economists’ forecasts for yet another drop in activity.

The Commerce Department reported Tuesday that construction of new homes and apartments jumped 22.2 percent from January to a seasonally adjusted annual rate of 583,000 units. Economists were expecting construction to drop to a pace of around 450,000 units.

February’s pickup was led by a big increase in apartment construction.

By region, all parts of the country reported an increase in overall housing construction, except for the West, which led the housing boom and has been hard hit by the bust.

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Overall housing construction activity fell to a pace of 477,000 units in January, according to revised figures. That was a little higher than first reported but still marked a record low.

Applications for building permits, considered a reliable sign of future activity, also rose in February by 3 percent to an annual rate of 547,000. Economists were expecting permits to fall to a pace of 500,000 units. Even with February’s rare burst of activity, housing construction is down a whopping 47.3 percent from a year ago.

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The Obama administration has announced a $75 billion program to stem skyrocketing home foreclosures, which have dumped even more properties on an already crippled market.

More than 2 million American homeowners faced foreclosure proceedings last year, and that number could soar as high as 10 million in the coming years depending on the severity of the recession, according to a report last month by Credit Suisse.

Home mortgages are harder to come by because of the credit crisis and unemployment is at a quarter-century peak of 8.1 percent, factors that will make it difficult for the depressed housing market to snap back to full health.

Builders aren’t optimistic that will happen any time soon.

Home-builder and REIT stocks have seen a steady rise in the last 2 days. The rise has been due to profitability news from banks and new home construction jump. However it is too early to get bullish. We need to see many months of solid data before jumping on the bull bandwagon.