By Martin Crutsinger
AP Economics Writer
WASHINGTON (AP) — U.S. homebuilders broke the 1 million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the spring buying season.
The overall pace of homes started rose 7 percent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said Tuesday.
Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 percent to an annual rate of 417,000, the fastest pace since January 2006.
By contrast, single-family home building, which makes up nearly two-thirds of the market, fell 4.8 percent to an annual rate of 619,000. That was down from February’s pace of 650,000, the fastest since May 2008. The government said February’s pace was a sharp 5.2 percent higher than it had previously estimated.
Applications for building permits, a gauge of future construction, declined 3.9 percent to an annual rate of 902,000. It was down from February’s rate of 939,000, which was also nearly a five-year high.
New residential building permits in southwest Ohio are up, with Butler, Clermont, Hamilton and Warren counties showing the largest increase — up 41 percent to 549 permits for the first three months of 2013 when compared with the same time last year.
Home building is expected to contribute to economic growth in 2013 for a second straight year — a reversal from 2006 through 2011, when it held back the economy.
Brett Ryan, an economist at Deutsche Bank, said that rate could add 0.5 percentage point to 2013 growth. That would be the biggest contribution from housing since 2004.
The housing recovery could spur an additional percentage point of growth by encouraging more consumer spending, Ryan said.
Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy homes. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.
March’s pace of homes started was nearly 46 percent higher than in the same month in 2012.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to statistics from the homebuilders.