Building of homes increases in June

Construction of new homes in the U.S. rose in June to the highest level in seven months, a sign that builders are starting to regain confidence as they emerge from the housing bust.

In Chesterfield County, permits for single-family houses rose to the highest level in 10 months. But the 70 permits issued in June was still down 31 percent from the same month a year ago.

Hanover County, which hit a nine-month high in May with 44 permits issued, fell to 34 in June -- down 32 percent from the same month a year ago.

"We're hoping things are starting to stabilize and we will see an increase later this year," said Richard E. Bartell, chief building official for Hanover County.

Gregory H. Revels, building official for Henrico County, said the Richmond area is different from the rest of the county.

"Certainly, we have felt the impact of the downturn, but the numbers have not been as dramatic as elsewhere," Revels said. "We have been holding level, fairly static."

Like Hanover, Henrico had a better month in May, with 47 single-family home permits issued, three more than in June. A year ago in June, 77 single-family permits were issued in Henrico.

Richmond, since it is mostly developed, traditionally has few new-home permits. The building activity in the city is in rehabilitation and infill projects. "We're not seeing a slowdown," said Rachel Flynn, the city's director of community development.

Nationally, the Commerce Department reported yesterday that construction of new homes and apartments jumped 3.6 percent last month to a seasonally adjusted annual rate of 582,000 units, from an upwardly revised rate of 562,000 in May.

That was better than the 530,000-unit pace that economists expected. It also marked the second straight increase after April's record low of 479,000 units.

Applications for building permits, seen as a good indicator of future activity, rose 8.7 percent in June to an annual rate of 563,000 units. Economists polled by Thomson Reuters expected an annual rate of 520,000 units.

"This is a good sign," said Christopher Corrada, president of the Home Building Association of Richmond and vice president at East West Partners of Virginia Inc.

"Builders have had enough time to retool their product portfolios to smaller, less-expensive plans and, at the same time, sell off some of the overpriced, overbuilt and overproffered inventory."

Tom Tyler, a senior analyst with Integra Realty Resources-Richmond in Glen Allen, said the building industry here may have bottomed out. "It's not getting worse," he said.

Integra Realty's data shows single-family housing permits for Richmond and seven surrounding counties fell 41 percent to 2,565 for the 12-month period through March.

Foreclosures continue to be a problem, driving down prices for new and previously owned houses, Tyler said.

He predicted that home construction in the Richmond area will remain flat this year.

"Hopefully, what we're hearing on a national level will trickle down to us and we will see an improvement later this year," said Henrico's Revels.

Contact Carol Hazard at (804) 775-8023 or .

The Associated Press contributed to this report.