Single-family home startups increased twenty five percent in 2012 nationwide from 2011. The National Association of Home Builders (NAHB) predicts that newly constructed homes will also increase another 35% in 2013. This momentum has provided hope that home building will again support the economic recovery.
The industry’s recovery may be slow due to the need to rebuild its workforce and supply of undeveloped lots. Chief economist of the National Association of Home Builders stated that the industry is “getting better, but we were very ill, and the convalescence period will be very long.”
NAHB reported that the index of U.S. builder sentiment reached its highest level in more than six years in December 2012. Overall, home builders are benefitting from the improving situation that is aiding the existing home market.
The decrease in unemployment from its peak in the fall of 2010 is fueling housing demand because more people can afford to form households. Improving sales and fewer foreclosures have dwindled the surplus of homes for sale, which is also driving the demand for housing construction.
Rising house prices alert buyers that the economy has turned around. After six years of falling prices, home prices and new home prices were up 2% to 4% across the board.
The upturn in home building has already been reflected in national economic numbers. The residential investment for the first three quarters of 2012 was up 14 percent compared to 2011.
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Housing market builds (some) momentum, USA Today, December 19, 2012