US home construction in 2012 was highest in 4 years

Construction increased last month for both single-family homes and apartments as prices rose, encouraging builders.

Tony Dejak/Associated Press/File 2012

Construction increased last month for both single-family homes and apartments as prices rose, encouraging builders.

WASHINGTON — US 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 is 12.1 percent higher than November’s annual rate. And it is nearly double the recession low, reached in April 2009.


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

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

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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.

‘‘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,’’ Michael Dolega, an economist with TD Economics, wrote 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. He 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 pre-recession levels.

Though new homes represent less than 20 percent of the housing sales 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 data from the homebuilders association.

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