The construction industry is seeing marked annual and month-over-month improvements, according to recent government reporting. The U.S. Commerce Department indicates new home construction across the board jumped up 6.9 percent to an annual rate of 760,000 from 711,000 in May. Bloomberg reports this is the highest number of housing starts since 2008, and is better than economists surveyed by the news source predicted (a rate of 745,000). In fact, the Commerce Department indicates the current rate of improvement could even lead to the industry contributing to national economic growth this year.
"Demand has bottomed out and we expect continued improvement," Yelena Shulyatyeva, an economist at BNP Paribas in New York, told Bloomberg. "We're in a recovery, a very slow one."
Single-family homes account for nearly 75 percent of new home construction, and this sector saw an increase of 4.7 percent month-over-month to an annual rate of 539,000, MarketWatch reports. This is a 21.7 percent improvement since June 2011, and this area is not even experiencing the strongest growth. Construction of buildings with at least five housing units improved the most in June - 17 percent. According to Bloomberg, the reason there has been such marked growth is because lower federal interest rates have made buying homes more affordable for many Americans.
One of the benefits of the overarching growth of this industry is the creation of more construction jobs. Companies are not only hiring more employees, they are also purchasing more raw materials and construction equipment like excavators, diggers and cranes. MarketWatch reports the growth is a very positive sign for the industry, even though the annual rates are nowhere near where they would be if the economy was still at pre-recession levels. However, any growth bodes well for the future.
While these numbers are a good sign for the industry, the report also reveals there has been a slight decline in permits to begin new construction. In May, the annual rate for new home construction permits was roughly 784,000, but this number fell 3.7 percent to 755,000 in June. A reduction in applications for permits could be indicative of companies taking precautions due to slow economic growth as of late.
