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Builders anticipate increased new home demand in 2011

Builders believe consumers will be buying more new homes next year.

Builders believe consumers will be buying more new homes next year.

Looking ahead to 2011, construction analysts say that the continued economic recovery will lead to an increased demand for new homes.

According to McGraw Hill Construction, there is expected to be a 25 percent increase in the number of new single-family homes built next year, as consumer spending and relocation ability continues to improve.

"While the economy is still facing headwinds, the stage is being set for construction to see modest improvement in 2011 from this year's very weak activity," said Robert A. Murray, vice president of economic affairs at McGraw-Hill Construction. "We're turning the corner, slowly. 2011 will be the first year of renewed growth for overall construction activity, and 2010 becomes the final year of a very lengthy and unusual construction cycle."

However, analysts also feel that the elevated demand for rentals will also continue, as builders are predicting a 23 percent increase in multi-family construction.

Sales of new homes have shown significant improvement in recent months, although they still remain at very low levels. Data released by the Commerce Department late last month showed a 6.6 percent increase in September, although the previous five months were still the slowest on record in more than 40 years.