Developers, rejoice — the U.S. home construction industry is experiencing a positive rebound. The data for July has just come in, and the government is reporting that the month saw an eight-month high. Construction increased 16%, equating to a little over one million homes, when adjusted for seasonal inflation.
Experts had predicted a less dramatic upswing for July. The better than expected performance can be a good indicator that the economy as a whole is rebounding, and that the housing construction industry itself is experiencing more long-term gains. Economists always hope to find that the housing market is growing stronger, because new-home construction has a positive impact on the national economy. Building spurs demand for raw goods and creates jobs, while new home buyers help out by buying new furniture, furnishings, etc.
The gains in the housing market helped bolster the stock market — after the Commerce Department released July’s numbers last Tuesday, the Dow Jones industrial average rose 80.85 points. July also marked a half year in which the U.S. consistently added over 200,000 new jobs each month, a streak that was last seen in 2007. More people with jobs means more people comfortable buying homes.
“There are more houses ‘on the market’ than I have seen in years, especially on the upscale end. People are still hesitant to build a custom home but you are seeing a lot of semi custom homes where you have some control over minor changes and selections. The one-of-a-kind type of homes that we design are still slow and we will not see a recovery until world conditions settle down and stock market settle down. But our large scale renovations in closer in neighborhoods are filling that gap. We see younger couples that like their neighborhoods and can justify the expense over moving further out and facing longer commutes”, said Guy Semmes of Hopkins and Porter Builders and Remodelers.
This gain was the fastest pace seen since last November. Similarly strong were building permit applications, which saw an 8% rise in July. The strongest region for construction was the Northeast, which accounted for 44% of the rise in demand. The South was stable at 29%, while sales are up 19% in the West and down 25% in the Midwest.
Though the outlook may look hopeful right now, most economists are waiting cautiously to see how things continue to pan out. The housing market has been on a roller-coaster over the past few years, and prudent investors have learned to bide their time rather than rushing in during each temporary peak.