New home construction is a key economic signal because of all the additional purchases that happen afterward, like furniture, electronics, home goods and decor, fancy doggy beds, fence pickets, fuzzy slippers, and beer can openers. So, it pays to pay attention to new home construction in order to have some idea of what’s coming.
Here are Five Fast Facts on new home construction around the country right now:
- 📉👎The Sitch - Construction on new homes in May was 14.4% below estimates, and 3.5% below May of 2021. You know it’s bad when 2021 seems good in retrospect.
- 🗺️Location, Location, Location - It was very regional, though, as the Northeast and Midwest actually saw monthly increases of 14.6% and 1.9% respectively. The South and the West decreased 20.7% and 17.8% respectively. Draw your own conclusions on that regionality, we won’t judge.
- 🏗️💵Where Are The Builders…And Buyers? Typically, a decline in new home construction leads to a decline in homebuilder confidence (which has dropped for six months in a row), which means they keep building fewer homes. Mortgage applications also dropped by 4%, so there are fewer people looking to both build and buy new homes.
- ❄️🥶Is It Just Me, Or Is It Cold In Here? All of these things are leading indicators that the housing market in general is cooling, which may make the current housing situation even worse over time. Now is not the time to have risky behavior!
- 😀👍Silver Lining - It’s not all bad news, though - building completions are up 9.1%! Of course, anyone who has done home improvements during the pandemic knows that there are shortages on both materials and labor, so that may not last. But we’ll take the good news where we can. We’re glass-half-full people here!
🔥Bottom line: New home construction is a big deal for jobs. Seeing the market slowing down isn’t great news, especially with the home shortages already happening all across the country. Let’s really hope that banks and lenders learned their lesson from 2008, and we don’t have another nasty bubble waiting to burst! Either way, having a can opener handy might be very helpful.
Are you feeling the construction slowdown?
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