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Builders nationally started construction on homes in September at the fastest rate since July 2008, a further indication that the housing recovery is strengthening and could help the economy grow.

Single-family construction rose 11 percent from August, while applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.

In Utah, permits for a 12-county area along the Wasatch Front were off a bit in September from a blistering pace in August (572 vs. 723) but were up 28 percent year-over-year and generally have been on an upward trend each month from a year ago. (Housing starts are not measured locally.)

"We're having a tremendous year," said Curt Dowdle, a new-home sales consultant at the Daybreak development and former executive officer of the Salt Lake Home Builders Association. "Sales are up almost 50 percent and are gaining strength as the year goes on.

"We're even having some difficulty getting houses built to meet demand because of the lack of available skilled subcontractors."

His successor at the homebuilders group, Paul Peterson, said that because of consumer demand, he's hearing of shortages of another kind from his members. "The biggest concern is finding finished lots. With [buyer] interest way up, lots are at a premium. Also, I talk with cabinet makers who say they're getting more calls than any time in the past two years. And when we meet with Realtors, they talk about there being only a four-month inventory [of existing homes]," which is a comparatively low figure that pushes up demand for new homes even more.

At Utah's Garbett Homes, Marketing Director Rene Oehlerking said the homebuilder has "seen a huge upswing in demand from buyers since August of last year, with sales volumes doubling from 2009."

He echoed Peterson's observation by noting so many people are actively looking for homes "that we've sold out our communities and are looking for more land."

Oehlerking attributes much of the buyer activity to "pent-up demand coming out of the recession. Many people were renting or making due with a smaller home while waiting on the economy to turn around. The economy's not where it should be and neither is employment, but there seems to be a feeling that maybe things won't get any worse. [Buyers] don't see massive [price] depreciation coming anymore."

Throw in mortgage rates that have been at historically low levels for months, he said, and the market seems to be turning around.

Although permits issued in Utah in any given month this year are about half the total pulled before the recession in 2006, builder and buyer sentiment about the housing market in the state and nationally have been on the upswing for five months straight.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG.

Construction activity nationally is 82.5 percent higher than the recession low hit in April 2009. Activity is still well below the roughly 1.5 million rate consistent with healthier markets. Still, the surge in construction suggests builders believe the housing rebound is durable.

"Today's data reinforce the view that while housing is not going to be the driver of economic activity that it was in the middle of the prior decade, neither will it be the anchor on activity that it has been in recent years," Greenhaus said.

The Commerce Department said Wednesday that builders broke ground on single-family homes and apartments at a seasonally adjusted annual rate of 872,000 in September. That's an increase of 15 percent from the August level. Apartment building increased 25.1 percent.

Construction activity rose in three of the nation's four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20 percent in both regions. Construction of new homes and apartments rose 6.7 percent in the Midwest. Housing starts fell 5.1 percent in the Northeast.

Builder confidence reached a six-year high this month, according to a survey by the National Association of Home Builders. The group's index of builder sentiment rose to a reading of 41. Although that's still below the level of 50 that signals a healthy market, it has steadily climbed over the past year from a reading of 17.

Sales of new and previously owned homes have been slowly improving this year, and home prices are starting to show consistent gains in Utah and nationally.

Housing is expected to keep improving next year. But many economists say economic growth will stay muted until companies step up hiring and consumers start spending more.

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