April 16, 2013 at 9:08 AM ET
U.S. builders broke ground in March on homes at the fastest pace in nearly five years, fueled by a surge in apartment construction. The gains show the housing market is gaining strength ahead of the spring-buying season.
The Commerce Department says builders increased their construction pace 7 percent in March from February to a seasonally adjusted rate of 1.04 million. That's the fastest pace since June 2008.
Volatile apartment construction jumped 31.1 percent to a seasonally adjusted rate of 392,000.
Single-family home construction, which represents nearly two-thirds of the market, fell 4.8 percent to a seasonally adjusted 619,000. But that was down from February's pace of 650,000, which was revised 5.2 percent higher and was the fastest pace since May 2008.
Applications for building permits, considered a good barometer of future construction, declined 3.9 percent to an annual rate of 902,000, down from February's rate of 939,000 — also nearly a five-year high.
Economists had cautioned that construction in March may have been slowed by colder-than-normal weather.
Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy. 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 the same month in 2012.
Housing construction fell 5.8 percent in the Northeast but showed gains in the rest of the country led by a 10.9 percent rise in the South. Housing construction was up 9.6 percent in the Midwest and 2.7 percent in the West.