U.S. Apartment Permits are at Fastest Pace in Five YearsLegal Compliance Resource
November 27, 2013 — 1,108 views
Developers in the United States received an approval last month permitting them to build apartments at a high pace that would allow them to complete ambitious projects in five years. This trend can help to a great extent in boosting the economic growth of the country in the last quarter of the year.
The U.S. Commerce Department stated that permits for building apartments and houses had been approved at an annual rate of around 1 million which is a seasonally adjusted rate. This rate is around 6 percent more than the rate of September which stood at 974,000. Also this is the fastest growth rate seen since June 2008, which was considered to be the financial crisis peak time.
Analysis of different fragments
Most of the growth was seen in multifamily homes. This fragment of residential construction emphasizes on rentals and can also be quite volatile every month. These permits grew around 15 percent since June 2008.
On the other hand, permits for houses for single families also rose to the rate of 620,000 reflecting an increase of 0.8 percent. This fragment makes up for approximately a two-third share of the market. This is however comparatively lower than the pace of August which stood at 627,000. Also, it reflects that high borrowing costs and prices are having a negative impact on the demands of the buyers.
Ian Shepherdson who is the chief economist for Pantheon Macroecnomics said that growth in the permits is suggesting that there will be an increase in the rise of these figures in future too. There are also indications that there will be big contribution by the housing construction industry towards the growth of the economy of the country in the last quarter of the year.
He also said that there can be a downfall in the sales of homes for single family if the developers do not notice any greater demand. He further said that the trend of single families opting for flats is what is threatening the developers.
Most of the economists are expecting the housing recovery to withstand a growth in the borrowing cost. But in recent months, higher costs have also led to a slowdown in the sale of homes. Freddie Mac, who is a mortgage buyer, said that there has been a rise of almost one percent in fixed mortgage rates since the end of May and this was when the borrowing costs was at its lowest.