Builder confidence in the market
for newly-built single-family homes was unchanged in March at a level of 58 on
the National Association of Home Builders/Wells Fargo Housing Market Index
(HMI).“Confidence levels are hovering above the 50-point mid-range, indicating
that the single-family market continues to make slow but steady progress,” said
NAHB Chairman Ed Brady.
And Housing Starts rose 5.2 percent
in February to 1,178,000 units and is 30.9 percent above the February 2015
rate of 900,000, confirming builder’s increased confidence. Single family construction was 7.2 percent
higher than January.
“While builder sentiment has been
relatively flat for the last few months, the March HMI reading correlates with
NAHB’s forecast of a steady firming of the single-family sector in 2016,” said
NAHB Chief Economist David Crowe. “Solid job growth, low mortgage rates and
improving mortgage availability will help keep the housing market on a gradual
upward trajectory in the coming months.”
Solid job growth is being helped by
those of working age returning to the jobs market. This month, more than 4.5
million people who weren’t in the labor force found
a job, according to the St. Louis Federal Reserve, even though only about 7.7
million Americans were officially unemployed the previous month. Just since
December, the U.S. economy has added more than 1
million jobs and brought more than 1.5 million Americans into the labor
force (based on the household survey).
The labor
force — which includes all adults over 16 who have jobs and as well as
those are who actively looking for work — has increased by 2 million in the
past year, the biggest 12-month gain since before the recession began in 2007,
writes Marketwatch’s Rex
Nutting.
This is
giving a tremendous boost to new-home construction, in particular. It is why
the U.S. Census Bureau reported that construction spending during January 2016
was estimated at a seasonally adjusted annual rate of $1,140.8 billion, 1.5
percent above the revised December estimate of $1,123.5 billion. And the
January figure is 10.4 percent above the January 2015 estimate of $1,033.3
billion.
On a year-over-year basis, private
residential construction spending is up 8 percent. Non-residential spending is
up 11 percent year-over-year. Public spending is up 13 percent
year-over-year. Looking forward, all
categories of construction spending should increase in 2016. Residential
spending is still very low, non-residential is increasing (except oil and gas),
and public spending is also increasing after several years of austerity.
In the meantime, the number of
people who have jobs has increased by 2.8 million. The strength of those
numbers is startling once you consider that the population of working-age
people (ages 16 to 65) has grown by only a million in the past year, says
Nutting. The number of employed people is growing about three times as fast as
the number of working-age adults. This means that the slack in the economy is
disappearing quickly (but it’s not gone yet).
The point
of this is that with so many workers returning to the jobs market, a strong
housing recovery is assured. For it is
working age Americans that want most to own a home, according to a recent National
Association of Realtors survey.
Harlan Green © 2016
Follow Harlan
Green on Twitter: https://twitter.com/HarlanGreen
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