US housing surges 10.5% in November
By Staff Writer
The housing construction activity in the US is picking up. It rose 10.5 percent in November. Single-family housing reached eight-year high.
Builders are taking up construction activity across the US. Builders are optimistic about the housing market that is expected to anchor the economy. The US builders are discounting the rise in interest rate and global turbulence.
With the construction activity picking up in apartments and single-family homes, builders expect steady sales.
The construction activity looks encouraging in single-family homes in addition to apartments. The single-family homes account for two-thirds of the US housing market and almost reached eight-year high in November.
The sustained demand in the construction sector will also boost demand for building materials and other household goods.
The Wall Street Journal (WSJ) reports that upbeat on economy prospects, builders broke ground on 1,173 million units. This is 10.5 percent growth on a yearly basis, according to the Commerce Department. The construction activity during the 11 months of 2015 also rose about 10 percent when compared with the previous corresponding period.
With latest numbers for the November, the US housing sector witnessed eight straight months with over one million units sold. This is the longest stretch since 2007.
Economists forecast the average housing would be 1.1 million units for 2015 as against the average of 1 million units in 2014. The housing sector's performance in 2015 is the highest since 2007.
According to a report by CNBC, the labor market strength indicates the availability of manpower underpinning the housing market recovery. The availability of houses for sale is still less than the demand. Economists forecast that housing taking off at a pace of 1,135 million units in November.
Gus Faucher, PNC senior economist said in a note to clients that "there is a great deal of pent-up demand for housing. With steady job growth of around 200,000 per month, a falling unemployment rate, rising wages, very low mortgage rates, rising household formations, and better access to credit, demand for new homes is steadily improving."
As per a report by Reuters, the latest data indicates a recovery in the US housing market but weakness in the world's largest economy. The industry continues to suffer in the wake of surging dollar. The US industry is witnessing a reduction in inventory investment and spending cuts by energy companies following the continuous fall in oil prices.
The overall business confidence on the US housing sales is positive if not robust. After the US Federal Reserve has hiked the interest rate, the mortgage rates will go up. The interest rate in the US was at near zero level for a decade.
However, the builders are facing a shortage of land and labor. These problems are leading to delays in completion of projects in time. These delays will also result in price escalation as builders try to recover their losses.