New Home Construction Ticks Up In June

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After months of continually taking it on the chin, construction of new homes nationwide is showing signs of landing a couple of jabs of their own.  On Friday, the Commerce Department released new home and multi-family construction numbers for June which showed an increase of 3.6%.  This number is particularly impressive because the construction of multi-family units actually fell over 26% for this period which means that the single family homes‘ component had to carry the load.  Another positive sign is that applications for building permits, usually seen as a barometer of future activity, rose nearly 9%.

Before we get too euphoric, it should be pointed out that these increases come on the tail of April’s record low numbers, in addition to being 46% below last year.  I should also note that these gains might be because builders want to get homes under roof so that first-time homebuyers can take advantage of the federal government‘s $8,000 tax credit which is due to expire at the end of November of this year.  David Crowe, the chief economist for the National Association of Home Builders, believes that the recent positive gains are a direct result of the “looming deadline” for the tax credit.  But hey - positive numbers are positive numbers and we’ll take them at this point.

What does it mean for the big picture as we head into the future?  I think we’ll see over the next two to four months if this blip turns into something larger or if we’re taking a temporary hiatus from the ‘doom and gloom.’

Related articles of interest:

• New US home starts surge in June (news.bbc.co.uk)
• Homebuilders: ‘Best conditions in a lifetime’ (money.cnn.com)
• New building starts up 34% from April (lansner.freedomblogging.com)