Home construction up, foreclosures down.

Market Update

Home construction up, foreclosures down.

The home construction industry showed signs of life in November and foreclosures fell to their lowest level in 18 months. But analysts say there is little reason to expect a big housing rebound in the year ahead.

Builders broke ground last month on new homes at a seasonally adjusted annual rate of pace of 555,000 units, a 3.9 percent rise from October, the Commerce Department said Thursday.

That compared with a rate of more than 2 million units at the height of the boom in 2005 and is just 16 percent above the 477,000 unit pace of April 2009 — the lowest point on records dating back to 1959.

Still, it does appear that “the bottom has been found” in home construction, said analyst Joel Naroff of Naroff Economic Advisors.

He projected home construction would rise from about 590,000 units this year to 675,000 in 2011, still well below historical levels.

One reason is the abundance of inventory on the market as lenders are expected to foreclose on 1 million properties both this year and next.

Foreclosures fell by 28 percent last month from October, according to RealtyTrac, but that was largely because several big lenders halted foreclosure activities as they shorted out allegations of severe problems with legal paperwork.

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Corey Dwan – REALTOR
Benson Sotheby’s International Realty
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