WASHINGTON - The depressed housing market has held the economy back for four years.
Home construction has finally begun a gradual comeback and should add to the nation's economic growth in 2011, a turning point in the recovery from the Great Recession.
In this Nov. 22 photo, construction worker Will Capper works on a new house in Palo Alto, Calif. A surge in apartment construction gave builders more work in November. But 2011 is still shaping up to be one of the worst years in history for homebuilders.
The main reason appears to be a positive consequence of the weak economy: Apartments are being built almost twice as fast as two years ago. Renting is the only option for many people who have lost their jobs, their homes or both.
Builders in November broke ground on homes - houses and apartments alike - at an annual rate of 685,000, the government said Tuesday. That was a 9.3 percent jump from October and the fastest pace since April 2010.
The numbers show how far the housing industry has come and still has to go:
- Builders should start at least 600,000 homes this year. That's up from 587,000 last year and 554,000 in 2009 - the worst year on record. In a healthy market, economists say, about 1.2 million homes are started each year.
- The pace of apartment construction has soared. About 175,000 will be started this year, also roughly half the number in a healthy economy. But it's far more than the 97,000 apartments begun in 2009.
- Single-family home construction, which accounts for about 70 percent of the housing industry, has essentially stalled for three years. This year will probably turn out to be the worst in the half-century records have been kept.
Construction of single-family homes this year could reach 440,000. That would be below last year's 471,000. In a good economy, builders would break ground on about 840,000 homes.
New homes are 20 percent of the housing market but have an outsize economic impact. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
Since the recession began in December 2007, housing has subtracted between 0.5 and 1.1 percentage points from U.S. economic growth each year. Cuts in spending by homeowners have further reduced growth.