New home construction grows to four-year high
November 20, 2012
The economy is beginning to turn around, and Americans are more willing to spend more and invest in a new home. This is exemplified by the recent statistics compiled by a Bloomberg Businessweek survey, which found new home construction grew to a four-year high in October.
According to the survey, housing starts increased 3.6 percent to an 894,000 annual rate, good news for construction firms that are always enthusiastic about the potential for more business. By investing in builder construction software, firms can prepare for the influx of customers by managing multiple projects in one compact solution.
"The housing industry is in a recovery," Larry Sorsby, chief financial officer of homebuilding company Hovnanian Enterprises, told the news source. "Those builders that survived the unprecedented downturn of the last six years are in a good position not only to survive but to thrive."
Federal Reserve helping new home constructions
Many Americans may still be scared to invest in new home construction because of the volatility of the economy, as well as several other personal factors. Understanding these pressures faced by Americans, the Federal Reserve is buying $40 billion a month in housing debt to keep down borrowing costs, which will help mortgage rates remain low. Low mortgage rates also make it less risky for Americans to build new homes and work with construction companies.
"The housing market has shown some clear signs of improvement, as home sales, prices and construction have all moved up since early this year," Ben Bernanke, chairman of the Federal Reserve said during recent speech in New York.
Housing demand aids in economic recovery
Harm Bandholz, chief U.S. economist at UniCredit Group in New York, told Businessweek the growing demand for new construction can be a driving force in the economic recovery. This demonstrates how Americans need to trust that the economy will begin to turn around if they aren't scared to invest in a new home or even purchase an existing home.
"These developments are encouraging, and it seems likely that, on net, residential investment will be a source of economic growth and new jobs over the next couple of years," Bernanke said.