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America Home Construction Market Rebounds Strongly During the Summer.

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The home construction industry in the United States showed encouraging signs in the month of July.  This is the fastest recovery of the industry since the month of November, 2013.

 

New York City, September 21, 2014

By Indranil Bhattacharjee
September 21, 2014

The home construction industry of the country surged to an eight month high in the month of July. After declining partially in the previous two months, this improvement is certainly encouraging for the industry.

According to a report released by the Commerce Department, the increased construction during the month of July was 15.7 percent to an annual seasonally adjusted rate of more than one million homes. It may be recalled that the overall construction figure suffered declines of 4 and 7.4 percent respectively in June and May, respectively.

The recovery of the industry in July reflects a drastic improvement in construction of single family homes and apartments. These two key industry segments got boosted by 8.3 and 33 percent during the month.   

The Northeast area was the chief contributor to the impressive figures for the month of July with a 44 percent increase in construction. In the South, these figures for the month of July closed after a 29 percent surge compared to the previous month. The sales figures for the West rose by 18.6 percent, too. However, the Midwest suffered a 26.8 percent fall.

BMO Capital Market’s senior economist Sal Guatieri analyzes the present condition saying, “Solid job growth and the recent decline in mortgage rates are helping boost construction. However, weak wage growth and tight lending standards are still depressing activity, especially among first-time buyers.”

It is certainly understandable that a mix of higher mortgage rates, rising home prices, and weak growth of wage has resulted in the creation of an unfavorable environment for the new home buyers, particularly for the ones looking to buy a home for the first time ever. However, in spite of this unfavorable condition, economists are expecting a turnaround because the country’s economy has been steadily increasing the number of jobs created per month since the last six months.