Residential home construction is at its highest level in four years. The pickup in momentum during the month of September bodes well for job creation, consumer spending, and the economic recovery.
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A seasonally adjusted annual rate of 872,000 exceeded analysts’ estimates. The Commerce Department said new construction rose 15% in August and 34.8% from September 2011.
When the rate becomes sustainable, it could contribute as much as 2% to US gross domestic product (GDP). That could take three to four years but the pace is being set now.
Some analysts say the increase in home building could further reduce the unemployment rate.
Construction workers are a major segment of the unemployed so if they begin to find work, it will have a particular impact on the unemployment rate.
Increasingly, a dichotomy is developing between consumers who are becoming more confident as a result of improvement in the housing markets and businesses that are still reluctant to make big investments.
Businesses are waiting to see how the upcoming election turns out and are uncertain about pending tax law changes.
Consumers do not seem to be as aware of the impact the fiscal cliff may have or of the continuing drag from the European crisis. Housing industry experts say that pent up demand
may be kicking in and that builders will have to ramp up quickly to meet it.