Builders start work on homes at fastest clip in 4½ years

WASHINGTON - U.S. builders started work on homes in December at the fastest pace in 4½ years and finished 2012 as their best year for residential construction since the early stages of the housing crisis.

The Commerce Department said Thursday that builders broke ground on houses and apartments last month at a seasonally adjusted annual rate of 954,000. That's 12.1 percent higher than November's annual rate. And it is nearly double the recession low reached in April 2009.

Las Vegas saw a 58 percent increase in new-home building permits in 2012, which is typical for many markets around the country, said Dennis Smith, president of Home Builders Research. He reported 403 permits in December, bringing the annual total to 5,908.

"Again, we're comparing that current number to the bottom, so that's going to enhance the number," he said. "It's not the percent increase, but it's going in the right direction. That's the big news. For the four years prior, it was going in the other direction."

The bottom line is the increase in new-home permits means job growth for Las Vegas, Smith said.

Construction increased nationwide last month for single-family homes and apartments. And the pace in which builders requested permits to start more homes ticked up to a 4½ year high.

For the year, builders started work on 780,000 homes. That's still roughly half of the annual number of starts consistent with healthier markets. But it is an increase of 28.1 percent from 2011. And it is the most since 2008 - shortly after the housing market began to collapse in late 2006 and 2007.

Steady hiring, record-low mortgage rates and a tight supply of new and previously occupied homes available for sale have helped boost sales and prices in most markets. That has persuaded builders to start more homes, which adds to economic growth and hiring.

The positive housing report, along with a steep decline in unemployment benefit applications, contributed to a strong day on Wall Street. The Standard & Poor's 500 gained eight points to close at 1,480, a five-year high. The Dow Jones industrial average ended the day up 84 points at 13,596. The Nasdaq composite rose 18 points to 3,136.

"There is no denying that the housing market recovery is solidifying, and we expect construction activity to ramp up to the 1 million annualized threshold by the end of this year," said Michael Dolega, an economist with TD Economics, in a note to clients.

Dolega said the gains in home building helped boost construction hiring in December by 30,000 jobs - the most in 15 months.

Dolega predicts the construction industry could add half a million jobs in 2013.

In December, the pace of single-family home construction, which makes up two-thirds of the market, increased 8 percent. While that's well below healthy levels, single-family housing starts are now 75 percent higher than the recession low reached in March 2009.

Apartment construction, which is more volatile, surged 23 percent last month. It is now back to prerecession levels.

Applications for building permits, a sign of future construction, inched up to a rate of 903,000 - the highest level since July 2008.

Confidence among homebuilders held steady in January at the highest level in nearly seven years. But builders are feeling slightly less optimistic about their prospects for sales during the next six months, according to a survey released Wednesday.

Wayne Laska, founder of Las Vegas-based Storybook Homes, believes this year will be better than 2012, when he sold about 85 new homes, the most since 2007.

"Obviously, the biggest threat is vacant homes and shadow inventory," Laska said.

In November, sales of previously occupied homes rose to their highest level in three years, while new-home sales reached a 2½-year high.