Las Vegas new-home permits surge in first quarter

Starts rose 2.6 percent to a 717,000 annual rate from March’s revised 699,000 pace, which was stronger than previously reported, the Commerce Department reported Wednesday.

The median estimate of 80 economists surveyed by Bloomberg News had called for a rise to 685,000.

Employment gains, cheaper homes and record-low mortgage rates are combining to lift demand and encourage builders to take on projects.

“We’re at a point where we see more light and less tunnel,” said Michael Gapen, a senior U.S. economist at Barclays Capital in New York. “Residential construction is no longer a drag on the economy and will contribute to growth.”

Meanwhile, distressed properties are thwarting a quicker recovery in the housing market three years after the end of the recession it helped trigger. Building permits, a proxy for future construction, fell from a more than three-year high.

Estimates in the Bloomberg survey for April ranged from 641,000 to 730,000. The prior month was revised from 654,000. Wednesday’s report reflects revisions dating back to January 2010.

Permits decreased 7 percent to a 715,000 annual pace last month from 769,000 in March, which was the fastest since September 2008, today’s report showed. March was revised from a previously reported 764,000 pace.

In Las Vegas, new-home permits reached 972 through the first three months of the year, a 20.5 percent increase from first quarter 2011, Home Builders Research reported. Builders pulled 514 permits in March, double the number from January and February.

Housing analyst Dennis Smith has suggested in recent months that permit numbers would start to climb as sales activity picked up at new subdivisions.

“We expect the number of permits to continue to improve going into the summer,” he said. “As the improving pace of new sales continues in the coming weeks, already low inventory levels will be depleted further.”

He showed standing inventory of unsold new homes at slightly more than 200 in mid-April, compared with about 450 at the end of last year.

Construction of single-family houses nationally climbed 2.3 percent to a three-month high of 492,000 from 481,000 the prior month. Work on multifamily homes, such as townhouses and apartment buildings, increased 3.2 percent to an annual rate of 225,000.

The outlook for residential real estate is improving, figures signaled Tuesday. The National Association of Home Builders/Wells Fargo index of builder confidence jumped to a five-year high, the Washington-based group reported.

“We’ve got a little pickup over last year, like every builder is showing, due to the constraint on supply,” said Dana Rogers, division president for Ryland Homes in Las Vegas. “You’ve got to be very cautious in this market and make smart decisions. Vegas is in synch with the rest of the nation. We’re in a transition phase toward the positive.”

Borrowing costs remain attractive. The average rate on a 30- year fixed mortgage fell to an all-time low of 3.83 percent in the week ended May 10, according to data from Freddie Mac going back to 1971. The average 15-year rate dropped to 3.05 percent, also the lowest ever, the McLean, Va.-based mortgage-finance company said.

Review-Journal reporter Hubble Smith conributed to this report.