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Construction Rebound?

October 17, 2012 – 5:04 pm

New home construction for September rose at the fastest pace in four years, up 15%. Single family units were up 11% and multi- family units up an impressive 25%.

Housing is a major pillar of wealth and strength in our economy and for a number of years it has been dragging us down. This year it will not only add to our GDP for the first time since the recession, but more importantly, add needed skilled and unskilled jobs as those new homes get built.

The direction of new construction is very positive, but is it sustainable? To answer that, look to the building permits part of the report. Permits are at a 4 year high up 11.6%. This translates into about an annual pace of 800,000 units. Our natural replacement rate is about 1,000,000, which has not been met for years so there is a shortage of new construction. With interest rates very low it seems housing is on track to keep growing at least until the next recession, which does not look like a possibility for a while.

Good Trading
Steve Peasley

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