U.S. home builders requested more permits last month than in any month since September 2008, according to a Commerce Department report, the Associated Press reported. The increase in permits is a “good sign for broader economic activity,” said Jonathan Basile, director of economics at Credit Suisse. The total represented a 4.5 percent increase. Despite the increase, housing permits would nearly need to double to be at “healthy” levels. [AP via Miami Herald]

Home builders are switching tactics and confronting head-on one of their biggest nemeses: foreclosed houses that not only lure buyers away with deeply discounted prices, but simultaneously depress the appraisal values of newly built homes.

At a packed session at the International Builders’ Show last month in Orlando, Fla., consultants and builders said that with gluts of foreclosures in major markets around the country — and more forecast to arrive in the next two years — the time has come to stop being passive and to begin aggressively educating buyers about the often hidden costs of buying foreclosures. [more]

Homebuilders began construction on new homes in October at the fastest pace in 11 months, according to a median forecast of 77 economists, as reported in a Bloomberg news survey. The housing starts jumped to an annual rate of 600,000, the forecast said, marking a 1.7 percent increase. Reduced home prices, coupled with federal tax incentives and reduced borrowing costs, were cited as key reasons for the expected industry turnaround. While some experts say that a tenuous job market could derail progress, the industry consensus is that the Commerce Department’s housing report, due later this morning, will yield good news. For his part, Toll Brothers CEO Robert Toll said he’s optimistic about the industry’s progress. “The new home market is improving,” Toll said. “We sense that it is, though slowly and through choppy waters.”

Homeowners and contractors alike are reporting that remodeling companies are more willing to grant discounts and take on smaller projects at a time when business has slowed, building materials are less expensive, and homeowners are having trouble obtaining financing. Because most remodeling is done soon after a buyer purchases a home, the decline in home sales has been noticeable across the industry: the most recent data shows that only $118.2 billion was spent on home improvements in the year ending first-quarter 2009, down from $146 billion the year before. The downturn has also caused new home builders to try their hands at remodeling work, and the competition is driving down prices, too, though some traditional remodelers say that’s bad for the industry. Inexperienced builders, they say, often underestimate costs, and later find themselves cutting corners or unable to finish the job on budget. Meanwhile, those who refuse to bid lower than they can afford are losing out on projects. [WSJ]

U.S. home builder sentiment has risen to its highest level since May 2008, according to a report from the National Association of Home Builders. The NAHB/Wells Fargo Housing Market index rose to 19 this month from 18 in August. In January this year, the index hit an all-time low of 8. Even though this new figure marks progress, CNBC said that scores below 50 are not ideal. David Crowe, chief economist with NAHB, said that the new score indicates a small improvement. “Today’s report indicates that builders are starting to see some glimmers of light at the end of the tunnel in terms of improving sales activity,” Crowe said.

Home builder confidence rose in May for the second consecutive month,
hitting its highest level since September 2008, according to the
National Association of Home Builders/Wells Fargo Housing Market Index,
released today. The index hit 16 in May, two points higher than in
April. According to the index, sales conditions and sales expectations
for the next six months improved, while buyer traffic remained the
same. Builder confidence increased 3 points in the Northeast and one
point in the South. NAHB Chairman Joe Robson attributed the
improvements to mortgage rates, price declines and the first-time
homebuyer tax credit. TRD [more]