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US Economy Marks an Increase in Construction of Singlefamily Housing Units
By Isaac Ndegwa
Home builders managed to break ground for more residential structures than expected over the month of July, according to the US commerce department. That is one extra sign that there is confidence in the economy because it points to the fact that demand for new housing is continuing to expand. The seasonally adjusted figure for July was 1.21 million homes (annual rate). That marks a 2.1% jump from the previous month’s posted figures. The initial forecast had been 1.18 million and that suggests more demand than had initially been projected. Of interest however, was the growth in single-family occupancy types of properties, which gained 0.5% to a final figure of 770,000 homes. The multifamily homes figure was 433,000; a 8.3% gain. Growth rates still do not over deliver projections
The previous rates of growth in new homes construction had been understandably slow since the recession periods ended. At the moment, the overall housing statistics are bullish, estimated to be 5.6% higher compared to those rates of 2015. July’s figure has so far been the second best in 2016. Regardless, some analysts still suggest that those levels are nothing to celebrate about. The growth rates do not over-deliver to the projections that had been set before the current housing bubble began to balloon up. The 12 month rolling average is still only 80% of the 50 year average.
Construction jobs are not increasing with the increase in home building projects
The construction jobs market is still considered to be good but not optimal for the current rate of growth. Experts from ‘Trulia’ note that the available construction jobs per single housing project are still at 10 year lows. There is a labor shortage in the construction sector. The growth levels are not enough to rise the tide where construction jobs are concerned. Construction employment only increased in 23 states between July 2015 and July 2016. The rest of the states marked a decline in new construction jobs albeit having an increasing number of ground-breaks for new housing projects.
In terms of investment and house prices, statistics still point that the demand for new and previously owned homes has propelled house prices to a point where some buyers are locked out of reach. Even though this benefits the sell-side of the market, it also spells out bleak conditions for the housing economy as a whole. There is little chance that investors will anyway manage to sell on their newly. In a broader perspective, increasing demand for homes and slightly increasing construction figures is still a good confidence gauge for the US economy.
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By Isaac Ndegwa
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