Residential building in Chattanooga continues to rebound in 2016

Home builders in the Chattanooga area started 1,785 houses in 2015, up 19 percent from the previous year. Home starts are projected to increase another 7.6 percent this year
Home builders in the Chattanooga area started 1,785 houses in 2015, up 19 percent from the previous year. Home starts are projected to increase another 7.6 percent this year
photo Staff Photo by Dan Henry / The Chattanooga Times Free Press- 2/16/16. Marty Campbell hammers in spikes to hold a concrete form while preparing to pour a driveway at a new subdivision being developed off of Pitts Road in Hixson on Tuesday, February 16, 2016. Recent precipitation has saturated the ground and caused some area construction projects to be delayed.

Area home starts

2011: 1,142 2012: 1,481 2013: 1,731 2014: 1,505 2015: 1,785 2016*: 1,921 *Projected Source: The Market Edge compilation of residential building permits in Hamilton and Bradley counties in Tennessee and Catoosa, Walker and Whitfield in Georgia

photo Staff Photo by Dan Henry / The Chattanooga Times Free Press- 2/16/16. Marty Campbell hammers in spikes to hold a concrete form while preparing to pour a driveway at a new subdivision being developed off of Pitts Road in Hixson on Tuesday, February 16, 2016. Recent precipitation has saturated the ground and caused some area construction projects to be delayed.

With home sales reaching a record high in Chattanooga last year, local home builders boosted residential building starts last year by nearly 19 percent and they show no sign of slowing down this year.

"There were a lot of builders who got out of the market when the housing slump hit, but for me the market has never been better," said Issa, owner of G.T. Issa Construction LLC and the second biggest home builder in Chattanooga last year behind only Pratt Homes. "I've lived in Chattanooga all my life, and I honestly feel like there has never been a better time to be here with the jobs and people we have coming to our city."

In the five-county Chattanooga area tracked by the Knoxville consulting firm Market Edge, home starts in 2016 increased by 280 houses to 1,785 - the highest number of home starts since before the 2009-2010 recession. Dale Akins, president of Market Edge, told the Home Builders Association of Chattanooga on Tuesday that home starts should increase another 7.6 percent this year.

"Home building follows jobs and we should continue to see good job growth in Chattanooga," Akins said. "Chattanooga last year showed better growth that most of the markets we track."

Although home starts slowed in 2014 along with a dip in job growth in Chattanooga, home starts have tended to grow steadily since the Great Recession ended in 2010.

Home building is still well below the peak levels reached in the 1990s, but builders report more confidence in the market.

"It's not a great market compared to what it once was, but it has gotten better and is showing some positive signs," said Jay Bell, president of Bell Development Co., another one of Chattanooga's biggest home builders and subdivision developers.

Akins said the economy could slow or turn down in 2017 or 2018. But for now, home building looks promising.

Chattanooga area Realtors last year sold a 8,717 homes, up 11.4 percent from the previous year and surpassing the previous sales record set in 2006. Home sales were propelled by historically low mortgage rates and an improved job and retirement market.

Chris Mabee of Cornerstone Construction, a vice president of the Home Builders Association of Chattanooga, said most builders are doing much better than a few years ago "and we're looking for an even better year in 2016."

David Crowe, chief economist for the National Association of Home Builders, said "solid job growth, low mortgage rates and improving mortgage availability will help keep the housing market on a gradual upward trajectory" through at least the first part of 2016.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday held steady at 58 this month. Readings above 50 indicate more builders view sales conditions as good rather than poor. The index had been in the low 60s for eight months until February.

Sales of new homes surged 14.5 percent last year to 501,000, marking the strongest year for this segment of the housing market since 2007.

But that momentum didn't carry over into January, when new-home sales fell 9.2 percent to a seasonally adjusted annual rate of 494,000. That's well below the historic 52-year average of 655,200.

The Associated Press contributed to this report.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

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