Jan
04

Home Builders Busier in November

January 04, 2012

Construction spending across the country rose in November for the third time in four months, reaching its highest mark since August.

The Commerce Department reported that spending on construction projects jumped 1.2 percent in November to a seasonally adjusted annual rate of $807.1 billion.

Some experts had expected a decline in construction spending. The rate is 0.5 percent above the November 2010 estimate of $803 billion.

Private construction spending rose 1 percent to a seasonally adjusted annual rate of $522.3 billion in November, the highest level since December 2009.

Home construction posted the fifth consecutive month of gains, rising 2 percent in November to a seasonally adjusted $522.3 billion. Single-family home construction increased 1.5 percent while multi-family construction rose 1.3 percent.

It is predicted that builders will start approximately 600,000 new homes this year. While that’s up from 587,000 homes in 2010 and 554,000 in 2009, the worst year on record, it’s still only half the amount of homes that experts say are built in a healthy market each year.

The year 2011 could end up as the worst in history for new-home sales. Newly constructed homes are competing with record-low existing-home prices, foreclosures and short sales.

But the creation of new homes helps spur economic growth. According to the National Association of Home Builders, each new home built creates an average of three jobs for a year and generates about $90,000 in taxes.

And while November spending on construction projects topped the $807 billion mark, analysts say a healthy market will hover around the $1.5 trillion mark, and that it could be four years before new construction even nears that level.

Categories: Economy, New Homes

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