Homebuilding is up to its highest level since 2008, and homebuilder confidence is at a six-year high. But that doesn’t mean you should abandon business plans for commercial and retrofit markets.
According to an AP report:
- Builders last month started construction on single-family houses and apartments at the fastest rate in more than four years, the Commerce Department said Wednesday.
- The number of homes that were started increased 15 percent from August to a seasonally adjusted annual rate of 872,000. That’s the fastest rate since July 2008.
- Single-family homes, which made up more than two-thirds of the new construction, rose 11 percent to 603,000. That was also the quickest rate in four years. Apartment construction, which can be more volatile from month to month, rose 25.1 percent.
- And applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, another high point since July 2008.
- The rate of new construction has surged more than 38 percent in the past 12 months.
- Housing starts are now 82.5 percent above the annual rate of 478,000 in April 2009, the recession low.
Great numbers, all. However, the AP report also states:
[Housing starts] are still well short of the 1.5 million annual rate that economists consider healthy. And they are far below the more than 2 million homes started in 2007 — the peak of the boom. But the steady upward trend appears likely to endure, analysts said.
In the AP report, Patrick Newport, US economist at IHS Global Insight, says housing starts should climb to 950,000 next year, to 1.27 million in 2014, and to more than 1.5 million in 2015.
That would be great as well. And we’d hope to see builders continue to offer green home options—whether they are well insulated, use renewable energies or are net-zero homes that produce all the energy they need. Such green and clean options have served to differentiate builders in a tough and tight housing market—and should continue to do so as buyers seek added, long-term value. (Meaning energy-efficient homes.)
Economists have called for a long, slow recovery for a while. And many, including those in the housing industry, have said that we won’t reach housing boom levels again any time soon. So unless you can get all kinds of new construction work, continue to look to retrofit and build business plans there as well. The existing housing stock is far too large to ignore, especially for energy efficiency upgrades.
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