Home Building Market Down for Now, But Report Shows Confidence Climbing
It’s been a long, cold, lonely winter, as George Harrison once sang. Harsh storms and polar vortexes have been wreaking havoc all across the United States for nearly five months now, and despite spring’s official start date on Thursday, we’ve still got a bit to go until we can enjoy the warmer weather. Such poor conditions have led to drop off in home construction, as recent reports have shown. But the newest data suggests some light at the end of this dark seasonal tunnel.
According a report released Tuesday by the Commerce Department, the number of Americans turning in applications for new building permits rose 7.7% in February. That leaves the total number of applications at 1.02 million units, a harbinger of a strengthening market, the Associated Press says. With a million new home projects in the works, the industry can expect a bit of a bounce back once those buildings begin to materialize — and that’s a promising sign for home builders everywhere.
However, the industry still isn’t out of the dark just yet. Numbers from that same report show a drop in the total number of new construction projects in February, down 0.2% from January. And January saw a hefty 11.2% decrease mainly due to the harsh weather conditions — which makes February’s numbers less ideal than they could be. But the number of new applications could be seen as a longing for a fresh start in the spring, and positive economic growth could bring about even more projects down the road.
Confidence in the market is also on the rise. The National Association of Home Builders/Wells Fargo index of consumer confidence jumped up a point to 47 from 46, says Newsday, which means confidence in the home building industry is very slowly climbing back up to reputable levels. This new number is especially good considering February’s steep drop off, which was the index’s sharpest on record.
For reference, the lowest point was reached in January 2009 when the index hit the number 8 — right in the middle of the housing crisis. Anything lower than 50 means more builders reported poor market conditions than favorable ones. But an increase from 8 to 47 in five years is remarkable progress, the studies show. Based on what the Commerce Department found, construction of single-family homes is back on the rise (by 0.3%, totaling 583,000 units built) while apartment building fell by 1.2% down to 324,000.
“We are very bullish on the home remodeling industry,” explains Carl Griffenkranz, VP of Marketing at Trend Terrazzo. “While all industries run in cycles, we have seen an increase in activity due to pent up demand. Home values are rising, and that gives consumers confidence to invest in their largest asset, their homes. We see this trend continuing as homes will only get older and require reinvestment from the owners.”
Are these numbers indicators of a larger shift toward more construction overall across the nation? The signs suggest so, but it’s still too early to tell. After all, the March numbers may end up telling a completely different story.