Single-family building permits began to return in the back half of last year for states hardest hit by the foreclosure crisis, according to Census Bureau data compiled by the Federal Deposit Insurance Corp.
In Nevada, which has held the largest foreclosure rate in the country for roughly five years now, single-family home permits increased 16.1% in the fourth quarter from the same period one year prior, according to the FDIC reports.
Permits in Arizona, the third highest foreclosure state, increased 21.2% in the fourth quarter after a nearly 15% gain in previous three months.
Georgia, a state with the most bank failures in the country, saw home permits rise 16% in the fourth quarter.
Permits in Florida, a state overrun with a serious foreclosure backlog and vacancy problem, rose 26% in the fourth quarter from one year before after a nearly 22% increase in the third quarter.
A spokesman for the FDIC said repairs and renovations are not typically included in the permit data and, despite the recent increases, homebuilding in these hard-hit states remains well below its peak.
In Florida, for instance, permits are off by 87% from the highest level of activity in 2005. Nevada is still 90% below the height of its buildup in 2004, according to the FDIC.
Housing starts nationwide dropped 1.1% in February but remained 34.7% above levels seen one year ago, the Commerce Department said Tuesday. Starts on single-unit homes were down more than 9%, but building permits on single-unit homes actually increased 4.8% from the previous month.
Paul Diggie, property economist for Capital Economics, said a recovery in homebuilding is being hampered by deeply discounted foreclosures and short sales. Still, he expects housing starts to increase to roughly 750,000 in 2012 from 610,000 last year.
"The slight fall in housing starts in February leaves the recent upward trend broadly intact," Diggie said. "Housing starts should rise further later this year on the back of continued employment growth and an improvement in housing demand."
Multifamily starts, however, are a different story. The rise in rental demand has boosted new building there. Multifamily starts increased 21% nationally in February, according to the Commerce Department.
According to the FDIC reports, foreclosure-heavy states are seeing an even bigger boom. In Georgia, multifamily starts increased nearly 160% in the fourth quarter from one year ago.