By Vicki Needham - 09/21/10 04:01 PM EDT
Housing construction increased unexpectedly in August, boosted mainly by apartment and condominium buildings rather than in the single-family home sector.
Construction of new homes and apartments increased 10.5 percent in August to a seasonally adjusted annual rate of 598,000, the highest level since April, the Commerce Department reported Tuesday.
"The surge in the condominium market is no surprise," said Anthony Sanders, a professor of real estate finance at George Mason University. "Given the tightness of mortgage credit and fears about the economy, entry-level owners often select lower-cost condominiums. The government is also skewing the market by catering policy toward multifamily housing."
Mortgage rates have hit record lows, but construction and home buying has been stymied by high unemployment and a lack of job creation.
Condominium and apartment construction was up 32 percent, while single-family building, representing 73 percent of the market, was up more than 4 percent after a 6.7 percent decline in July.
Single-family housing starts are up 11 percent from their low in January 2009, but they're down 78 percent from their peak in January 2006.
Although housing construction has increased more than 25 percent from an April 2009 trough, building is still 74 percent below their peak in January 2006.
Building permits, reflecting future building, also increased by 1.8 percent from a record low to a 569,000 annual rate in August.