A surge in new home construction combined with a positive Federal Reserve report bodes well for the nations economy this year.
The Census Bureau reported last week that new home construction had reached a level that has not been seen since the housing market began to collapse before the recession hit. The agency said that new home construction last year was up 28 percent from 2011 with construction started on 950,000 homes, which is the highest in more than four years. The new housing starts are a sign of increasing builder and consumer confidence in their job stability and the long-term economy in their willingness to take on risks.
An increase in the number of households accompanied by a decrease in homes on the market are also contributing to sales. Driven by consumer demand and record-low mortgage rates, housing prices are also expected to increase about 4.3 percent.
We think the recovery is real this time, Scott Anderson, chief economist for Banks of the West, told the Los Angeles Times. One of the bright spots in our forecast is the housing market. These are very strong numbers.
The demand will also impact employment. New home construction creates an average of three jobs a year and generates about $90,000 in tax revenue.
Reports from the Feds 12 districts said the economy continued to improve at a moderate or modest pace in November.
Parts of the Northeast are rebounding from Superstorm Sandy while housing and auto sales also rose. Retails sales rose moderately in December.
Overshadowing the outlook, though, is the standoff between President Obama and Congress over the debt ceiling and across-the-board spending cuts due later this year. Until that is resolved, the Fed said, many employers are holding off hiring, another warning to Washington to work out a compromise.