Posted by Leonard Steinberg on October 17th, 2012

As always, the press has just caught on to the fact that construction is experiencing a mammoth surge….it started months ago, but now the data is out with enough hard evidence to prove a point I have been making for quite a while. Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector’s budding recovery is gaining traction. The Commerce Department said on Wednesday housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units. That was the quickest pace since July 2008, though data on housing starts is volatile and subject to substantial revisions. New York is experiencing this same hive of activity, even though REBNY just reported that this is the worst decade in history for new construction…..2 years into the decade: will they revise their estimates sometime in 2035?

In Manhattan, construction sites are roaring to life: New activity was spotted at 56 Leonard Street yesterday, and everywhere there are steel beams, concrete trucks, and thousands of new jobs. This morning I witnessed a huge truck transporting a massive steel beam being towed because it had parked illegally overnight. Architects and designers barely return calls. The noise, dust, traffic jams are back! Surely all of this must bode well for the economy in general, even though it may make our lives a little more stressful.

Augusts’ starts were revised to show a 758,000-unit pace instead of the previously reported 750,000. Economists polled by Reuters had forecast residential construction rising to a 770,000-unit rate. The housing starts rate is now about 40 percent of its peak in January 2006. The housing market, the Achilles heel of the recovery from the 2007-09 recession, is slowly healing. September groundbreaking for single-family homes, the largest segment of the market, rose 11 percent to a 603,000-unit pace – the highest level since August 2008. Starts for multi-family homes climbed 25.1 percent. Building permits grew by 11.6 percent to a 894,000-unit pace in September. August’s permits were unrevised at 801,000 units.

And as we have said before, all of this is resulting in the ‘i-WORD’…..inflation. If anyone thinks this new spurt of activity and buying won’t affect pricing, think again. The press is not reporting it right now……but you’ll read about it pretty soon.