Residential construction nationally reached its highest level of activity in 17 years last month, while activity in the Valley has already surpassed last year’s record.
The U.S. Department of Commerce reported Wednesday that builders nationally broke ground on 1.96 million units, at a seasonally adjusted annual rate, representing a 2.9 percent increase from September’s pace. October’s activity was the strongest monthly performance since January 1986.
In the Valley, new home construction last month was up 5.3 percent from the same month last year. However, the volume, 3,963 homes, was less than July’s 4,526 homes, the highest month in Valley history.
As of Oct. 31, 39,921 newhome construction permits have been issued in the Valley, ahead of last year’s total of 38,914, Valley housing analyst R.L. Brown said.
"If we keep the pace, we could end up with 46,000 to 47,000 permits," he said.
Nationally, new singlefamily home construction clocked in at a record pace of 1.62 million units, a 5.7 percent increase from September. By region, total housing construction — single and multi-family homes — jumped in the West by 17.7 percent from September to October to an annual rate of 526,000, the highest level since December 1986.
"It’s a combination of a number of things," Brown said. "The first one is the population continues to grow. People continue to be attracted because of the ambiance of the area and the weather, and they perceive it as an area of opportunity. They’re also attracted by the affordability of housing versus, in particular, California. And then mortgage interest rates help to make it affordable."
Buddy Satterfield, president of Shea Homes in Arizona, said October was a good month for his company as well as other homebuilders across the Valley.
"We’ll probably finish 15 percent above last year as an industry," he said. "It’s really interest rates. Rates are so ridiculously low it’s phenomenal, and it’s really kept the country out of a much deeper recession.
"Right now, I think that the conditions are just as close to perfect as you can get because we still have the really low rates and we’ve now got some job growth this year. And population growth is better than last year."
With the exception of Scottsdale, every market in the Valley is seeing substantial home building activity, Satterfield said.
"We’re as far west as Buckeye and that’s doing very well," he said. "We’re finishing up as far east as the Gold Canyon Ranch area at Apache Junction and we’ve got a lot of stuff down in the southeast Valley, like Seville and even Pinal County down at the Johnson Ranch area. We’re also way out in Maricopa, and that’s doing great."
The strong home building activity is a reflection of the Valley’s strong home resale market in that many of those buying new homes are able to sell their existing homes, Brown said.
"The bottom line is, for the foreseeable future, it looks to us like housing should continue good and housing will certainly weather some moderation of the low interest rates," he said.