U.S. housing recovery on track — even if it doesn’t feel like it in your neck of the prairie

These are rent-to-own homes in Albuquerque

Housing starts fell in May from a 3-1/2 year high, although permits to build new homes rose sharply, suggesting a nascent housing recovery remains on track.

The Commerce Department said on Tuesday that groundbreaking on new homes dropped last month to an annual rate of 708,000 units, falling short of analysts’ expectations…However, upward revisions to data for March and April put starts above 700,000 for five straight months, a first since 2008.

This highlights a big turn of events that is under way: while the broader U.S. economy appears to be losing steam, housing is gaining traction and has become a relative bright spot. Despite a sharp slowdown in hiring, home prices appear to be stabilizing and homebuilder sentiment has risen to a five-year high…

The decline in starts in May was entirely due to a 21.3 percent drop in groundbreaking for multi-family buildings, a volatile reading that is prone to substantial revisions…Starts for single-family homes, which account for most of the market, increased 3.2 percent.

In another positive sign, new building permits jumped 7.9 percent in May to a 780,000-unit pace. That was the highest since September 2008 and well above analysts’ forecasts…

Many economists now predict home building will add to economic growth this year for the first time since 2005.

All news the Republicans hate to hear.

Housing construction – even multi-family buildings – ain’t exactly rocket science. Folks who’ve been working construction for decades are among the hardest hit by the Great Recession. Courtesy of unqualified mortgages and manipulation in buying and selling [mostly selling] mortgage-based derivatives.

Most economists agree this is the last significant portion of the United States economy needed to begin to climb out of the hole we were dropped into by supply-side dribble-down money-lovers. If this continues at any sort of steady rate, the broader economy will benefit. Employment will continue to benefit.

Even if you agree as I do that Republican attempts to cripple minimal Keynesian remedies have held back the tortured climb from the worst economic disaster in 80 years – they are working well enough to have a measurable effect in almost every state, every urban center.

One thought on “U.S. housing recovery on track — even if it doesn’t feel like it in your neck of the prairie

  1. moss says:

    One of the most surprising numbers in the city of Santa Fe is unemployment at 4.7% – while the stock of unsold homes, especially McMansions, is still high.

    Of course, tourism has rebounded. I never would have thought it might compensate for the housing crash.

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