Last Three Months of 2021 Saw Growth for U.S. Builders

 

December 2021 date shows that the construction of new homes climbed for the third consecutive month. Reports find that new construction homes are at a seasonally adjusted annual rate of 1.7 million units. Close to 1.6 million housing units were started at a 15.6% increase over 2020.

Even with the rising interest rates, the housing market is still going strong. The average long-term U.S. mortgage rates rose to the highest levels since March 2020 in January 2022. Lawrence Yun, chief economist for the National Association of Realtors, says economists expect to see an increase in mortgage rates this year. This is due to the Federal Reserve slowing down on purchasing monthly bonds.

Applications for building permits rose 9.1% to a seasonally-adjusted rate of 1.87 million units. This is the strongest month for permits since the beginning of the year in January 2021. Applications for building permits can forecast future building activity. Housing starts in the Northeast and the Midwest rose the most at 20% and 36%.

The National Association of Home Builders and Wells Fargo monthly survey, which gauges builder sentiment, reported that it still remained stable. This is good news since builder sentiment was down slightly to 83 at the beginning of 2022.

“Demand exceeds supply, and builders are working as hard as they can to catch up, a process that was always going to be measured in years, not months, after the massive shift in demand toward single-family homes sparked by the pandemic,” said Stephen Stanley, chief economist for Amherst Pierpont.

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America’s Labor Market Still Going Strong

The US Labor Department’s Jobs report for February showed the American labor market remained strong. Reflected in the report showed that 273,000 jobs were added by the US economy. The US Bureau of Labor Statistics said this was substantially more than us economists had foreseen. In fact, the numbers resulted in the largest monthly increase since May 2018 which put the unemployment rate back to the historic low of 3.5%.

Among the job gains per industry, the leading gains of new jobs were in health care and social

assistance, food services and government. Within those industries, 7,000 people were hired for the April Census.

The Institute of Supply Management supplied data showing that the US manufacturing sector has been growing the past five months. The ISM report is just another factor indicating that the US economy is in a good place.

“With global growth stabilizing in recent months and domestic economic activity also starting to pick up, the ISM survey adds to the evidence that 2020 is likely to be a better year for US manufacturers,” wrote Capital Economics’ Senior US Economist Andrew Hunter in a note.

The year leading up to the February job survey paychecks rose by 3% with a 0.3% bump in February. The month’s report in addition to better-than-expected services PMI from the Institute for Supply Management was a plus for the US economy according to Michael Hanson, SVP of research at Fisher Investments.

This is just icing on top of the January report which beat expectations. The Labor Department’s Jobs report found that the US economy added 225,000 jobs with an unemployment rate of 3.6%. Job growth was seen in the construction, health care, transportation and warehousing industries.

According to Capital Economics Chief US Economist Paul Ashworth, mild weather in January boost the construction and transportation sectors.


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