According to CNNMoney.com: February’s 22% overall housing increase was driven by a nearly 80% increase in construction of multi-family homes. New construction of buildings with 5 or more units increased nearly 80% to 212,000 from 118,000 in January.
Applications for building permits, considered a reliable sign of future construction activity, rose 3% to a seasonally adjusted annual rate of 547,000 last month. Economists were expecting permits to fall to 500,000.
While the surge in new construction was a welcome sign for the nation’s battered housing market, analysts warned that the increase could be short lived. “With new home sales still falling and the months’ supply at a record, there is no reason for home building to rise,” wrote Ian Sheperdson, chief U.S. economist at High Frequency Economics in a research note. “This is a temporary rebound, not a recovery.”
It would seem strange for new construction to build into the face of a recession, and it should. In our opinion, it is just another sign that the building industry is out of touch with the times. After all, these are times that include record real estate auctions, foreclosures, short sales and a $1 trillion dollar stimulus package that someone is going to have to pay for.
I do understand that development companies and builders have to continue building to make money and keep the doors open, I am just surprised that this many banks are willing to put more loans out there.