AURORA | Few indicators tell the economy’s story as well as home construction statistics.
A new home means construction jobs, truckloads of materials and thousands of dollars worth of appliances, furniture and other household items. So when housing is up, it tends to mean the economy is, too.
And recent housing data in Aurora and around the country seems to be pointing to a sustainable economic recovery.
According to the U.S. Department of Commerce, applications for new home construction in April were at their highest level since 2008. In Aurora, permit applications so far in 2013 are almost double what they were a year ago, according to city statistics.
The department’s statistics said seasonally-adjusted numbers for home starts were actually down from March to April, but the application data points to a sustainable recovery.
Vinessa Irvin, manager of development assistance for the city of Aurora, said the 325 permit applications so far this year aren’t necessarily a guarantee that crews will soon be at work on 325 new homes, but they are a good indicator that construction is coming.
“It’s never a guarantee, of course, but the builders are not going to spend money on a permit that they are not ready to roll on,” she said.
The bulk of Aurora’s new construction is happening on the city’s eastern edge, Irvin said.
Many of the projects are happening in neighborhoods where the infrastructure went in before the 2008 recession, but builders had to scrap plans for new homes when the economy tanked.
The Department of Commerce data released last week said applications for building permits are up 14.3 percent from March to a rate of 1.02 million homes. That’s the most since June 2008.
A March report said that builders broke ground on more than 1 million homes in that month for the first time in five years.
Dr. Ron Throupe, a business professor at University of Denver, said housing starts are generally a good sign for the economy because there is so much other economic activity tied to them — from construction jobs to carpet sales.
“In the past it has led us out of recessions,” he said.
The department’s report said builders started work in April at a seasonally adjusted annual rate of 853,000. That’s a 16.5 percent drop from March’s peak, a dip largely driven by a decline in apartment construction, which tends to be volatile from month to month.
Builders are benefiting from a sustained rebound in housing that began a year ago. Steady job growth, rock-bottom mortgage rates and rising home values have boosted demand.
New construction of single-family homes declined 2.1 percent in April to an annual rate of 610,000. Multi-family construction, which is volatile, plunged 39 percent to a rate of 243,000. That drop more than reversed a 26 percent surge in March.
In metro Denver, Throupe said multi-family construction has been and likely will remain strong.
“On the apartment side, Denver and the Front Range has been a hot market for apartments for a couple years,” he said.
That growth has been a product of steadily climbing rents and low vacancy rates, he said.
In Aurora, new multi-family construction hasn’t taken off yet in 2013. So far, no builders have filed a permit for an apartment project. But Irvin said that will change in the coming months as several builders who have plans in the works file their applications.
The construction uptick comes at a time when home sales are climbing.
New home sales rose 1.5 percent in March to a seasonally adjusted annual rate of 417,000. That’s still below the 700,000 pace considered healthy. But sales are 18.5 percent higher than a year ago.
Housing starts are also an important indicator for local Realtors, even those who don’t specialize in selling new homes, said Kim Iverson, president of the Aurora Association of Realtors.
“New home starts is definitely something that you watch because it tells you about the economy overall in the area,” she said.
And local Realtors are seeing the housing market overall improve, Iverson said, though it isn’t quite back to where it was before the recession.
“I wouldn’t say that we are back to where we were pre-recession, but we are starting to get there,” she said.
The Associated Press contributed to this report.