The lean years appear to be coming to a close for the American housing and construction industry.
While February’s housing start numbers dropped by about 8,000 from January’s pace, falling from 706,000 to 698,000, that figure was still substantially higher than the estimated 518,000 housing starts in the U.S. in February of last year.
The number of building permits in February issued rose from 682,000 to 717,000 between January and February, an increase of 5.1 per cent. The increase was even sharper compared to the 534,000 permits issued in February, 2011.
Both the number of housing starts and the number of building permits issued jumped by over one-third over the same time last year.
The numbers show the amount of new work set to start is on the rise.
While homebuilder confidence remains relatively low – it rated a 30 on the Homebuilder Confidence Index, a scale on which any figure below 50 shows pessimism – that number is still more than three times higher than its lowest point following the global financial crisis.
Unsold homes are also selling much faster once they go on the market. Where homes took an average of 12 months to sell at points in 2010, homes are selling in around six months now, on average.
The Architectural Billings Index is also trending positively, while the Projects Inquiry sub-index reached its highest point in four years, suggesting that multi-residential and non-residential construction is also on the rebound.
Reasons for the uptick in construction include a dwindling amount of supply in recent years – housing starts were severely depressed during the financial crisis – and a dropping unemployment rate.
As America’s unemployment rate dropped from 9 per cent in September, 2011 to 8.3 per cent, helped along by the creation of an estimated 734,000 new jobs nation-wide in February, more Americans felt confident in their ability to earn and to service mortgages.
There are still obstacles, however, with financing chief among them. The Mortgage Bankers Association noted bank loans for mortgages continue to fall, meaning confidence in the economy could still be preventing a full-scale industry resurgence.
Furthermore, while the joblessness rate has fallen, job growth has outpaced overall economic growth within the country and a correction is likely.
Austerity measures could also depress economic growth, which will in turn keep unemployment rates from falling precipitously.
For the time being, however, the recently-released figures show a far better outlook for the U.S. construction and housing sector than the country has seen in recent years.