Builders took out construction permits on 4,442 single-family homes in the Washington metropolitan area in the third quarter, up 11 percent from a year earlier, according to the Census Bureau. Nationwide, permits fell 17 percent.

The federal budget rose 18 percent this year to US$3.52 trillion and is projected to grow to US$5.3 trillion by 2019, according to the Treasury Department. NVR Inc., Toll Brothers Inc., Hovnanian Enterprises Inc., Pulte Homes Inc., KB Home and D.R. Horton Inc. are buying land and reporting sales growth in Virginia, Maryland and the District of Columbia, anticipating job and home price gains in the region.

“It's good to have a rich uncle and the federal government clearly isn't spending less,” said Stephen Fuller, professor of public policy and director of the Center for Regional Analysis at George Mason University in Fairfax, Virginia. “We're on a rebound much faster than other locations because of increased spending to manage the economy and to manage two wars.”

About 15 percent of all federal procurement goes to the Washington area, Fuller said. In the latest example of federal largess, the administration on Oct. 29 endorsed plans to extend an US$8,000 tax credit for first-time homebuyers, which is scheduled to expire Nov. 30.

Prices of existing homes in the Washington region climbed each month from March through August, gaining a total of 7.8 percent, as measured by the S&P/Case-Shiller home price index. The index for the nation's 20 largest cities rose 4.8 percent from its low in April.

In Fairfax County, Virginia, the most populous county abutting the District of Columbia, September prices surged 12 percent from a year earlier to a median of US$365,000, according to Metropolitan Regional Information Systems Inc. The number of total listings fell 28 percent.

Prices in the metro area are still 29 percent less than their peak in May 2006, the home price index shows.

“Do I see prices rebounding? Yes,” Dan Freire, a real estate broker in Ashburn, Virginia, with The Long & Foster Cos. “Will it be like earlier in the decade? No, and that's good. For now, prices are up because inventory is going down.”

Freire was the broker for Dean Cantrill, who transferred from Iowa to work for Cobham Plc, a British aerospace company with offices in Herndon, Virginia.

Cantrill sold his home in Iowa for US$413,000, about US$15,000 less than the listed price. He paid about US$660,000 for a four- bedroom, 5,500-square-foot (551 square meters) house built by Pulte about 20 miles (32 kilometers) from his office. He paid more than the US$639,000 listed price after ordering a finished basement, three-car garage and enlarged master bedroom.

Cantrill moved into the home last week. He said there is “about three or four times” as much construction going on in the community as when he looked at the property in July.

Washington ranked as the third-healthiest U.S. housing market — behind Austin and San Antonio in Texas — in a report published Oct. 7 by Hanley Wood Market Intelligence of Costa Mesa, California. In a similar report in February, Washington ranked No. 10 among the “100 healthiest,” based on job growth, household income and population projections.

In the third quarter, construction started on 2,285 homes in the Washington area, which was 21 percent more than a year earlier and the biggest quarterly jump in two years, according to Metrostudy, a Houston-based research firm that tracks construction data in more than 80 metro areas. Housing starts in the region peaked at 10,600 in the second quarter of 2005.

Housing isn't the only type of local real estate benefiting from government spending, according to Michael D. Fascitelli, chief executive officer of New York-based Vornado Realty Trust, the largest real estate investment trust by market value, which owns 18 million square feet (167 hectares) of office and retail space in Washington.

“Washington is the best market in the country for apartments, hotels and offices,” he said at an Oct. 15 forum in New York sponsored by Bisnow.com.

A bigger budget means more federal jobs. In September, there were 363,800 people working for the government in the Washington area, according to the Bureau of Labor Statistics, up 3 percent from a year earlier. For each new government employee, about 1.7 private contractors are added to federal payrolls, according to Fuller.

By 2011, another 82,000 new jobs will relocate from other states to military installations in the region through the Base Relocation and Closure Program, according to the Maryland Department of Business and Economic Development and the Virginia National Defense Industrial Authority.

The Washington metro area's unemployment rate stood at 6.2 percent at the end of September, the lowest of the nation's 10 largest metro areas, according to the labor statistics bureau. The national rate was 9.8 percent.

Washington's median household income — US$85,824 in 2008 — is also the highest of the nation's 25 largest metropolitan areas, according to the Census Bureau.