After Dismal Year, Homebuilders See Hope in 2012

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home builder confidenceWASHINGTON -- Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But improvement at the end of the year lifted hopes for a recovery.

In December, builders broke ground on a seasonally adjusted annual rate of 657,000 homes, the Commerce Department said Thursday. A third straight increase in single-family home building was offset by a drop in volatile apartment construction.

The housing market still appears years away from full health.

For the entire year, builders began work on 606,900 homes. That's slightly better than in the previous two years. But it's only about half the number that economists equate with healthy markets.

Construction began on 428,600 single-family homes in 2011. It was the fewest on records dating back a half-century. In a good economy, builders tend to break ground on roughly twice as many. Single-family homes are key to a housing rebound because they account for roughly 70 percent of the market.

Still, analysts said the final months point to improvement.


"We expect further sustained gains in starts and permits over the next few months; a real recovery is getting started," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Homebuilders have grown slightly less pessimistic because more people are saying that they might be open to buying a home this year. The National Association of Home Builders/Wells Fargo builder sentiment index rose in January to its highest level since June 2007.

The number of actual purchases remains weak, but the rising interest from would-be buyers, along with record-low mortgage rates, is raising optimism.

Builders are struggling to compete with deeply discounted foreclosures and short sales, however. (Short sales occur when lenders allow homes to be sold for less than what's owed on the mortgage.)

Though new homes represent just 20 percent of the overall home market, they have an big impact on the economy. 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.

After previous recessions, housing accounted for at least 15 percent of U.S. economic growth. Since the recession officially ended in June 2009, it has contributed just 4 percent.

Another reason new-home sales have fallen is that previously occupied homes have become a better deal. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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After Dismal Year, Homebuilders See Hope in 2012

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Manchester weathered the recession with a 6% unemployment rate, and the former mill town’s strong income growth and refurbished business district still make it a promised land for job seekers. Finance and health care are traditionally strong sectors here, with average wages between $64,000 and $75,000 a year. Six percent of city residents work in management positions, pulling in $105,000, on average. Employers such as the Southern New Hampshire Medical Center and Elliot Hospital are hiring for high-paid positions in nursing, information technology and management.

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A former industrial town turned government center, Trenton’s job, salary and technology-sector growth rank among the top 50 in the country. The overlooked capital city boasts something else, too: low competition for high-paying jobs. Bristol Myers Squibb, Princeton University and the University of Medicine and Dentistry of New Jersey are all hiring in the region, with openings for business managers, financial analysts and research scientists. Trenton’s largest industries include finance, health care and computer technology, which collectively employ 20% of the city’s workforce at an average of $75,000 to $87,000 a year.

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Boston is the center of New England’s finance, information-technology and health care sectors, which means that jobs in Beantown are both abundant and well-paid. In fact, the city’s most common occupations include registered nurse ($87,630 a year, on average), general manager ($125,400) and software developer ($102,950). Firms such as Genzyme and Tufts Medical Center are currently hiring in the life sciences. And if current patterns hold, Boston’s economy will continue to grow. In 2011, it outpaced other large cities on almost every recovery metric, from unemployment levels to manufacturing job growth.

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Anchorage’s remoteness works in job seekers’ favor: Competition for jobs is relatively low, and companies pay top wages to lure talent north. Health care and energy are both top industries, with roughly 6% of the population working in each. CH2M, the international engineering firm, runs a large operation in the area and is currently hiring engineers, analysts and project managers. The Alaska Regional Hospital is looking for RNs. Average salaries for health care and extraction jobs are $89,240 and $60,410, respectively. Wages for all professions skew 16% above the national average.

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