There is a ton of talk going around about Home Building and Sales. In Part I of this article we discussed The Mortgage Industry, The Consumer, and the Effect on Housing Start. This article will take a look at Home Building and Sales as a commodity in a Global Market. It is a fact that the home building industry in North America is facing some tough times. For many construction companies, the end of the leasing cycle puts a crunch into their building plans, forcing them to re-evaluate their projects or close them altogether.
In a declining economy, there are many more consumers than builders. Consumers have cut back on spending for other goods and services and many have even stopped buying homes altogether. As a result, home building permits are beginning to fall as well, forcing builders to seek out new building materials and financing sources. As mentioned above, new construction homes for sale are a commodity.
The fact that the home building industry is in a tailspin affects both the consumer and the construction industry. When there is less demand for construction jobs, the consumer suffers. When consumers suffer, businesses suffer. When businesses suffer, the entire economy suffers. Home building and sales suffer as well, when the housing market is hit by the decline in real estate prices. This means less money from consumers for essentials like home loans, leaving less money for home building and sales.
In the last quarter of 2021, The United States experienced one of its worst declines in home building and sales since the Great Depression. The National Association of Home Builders predicted that over the next five years there would be a one-year low in home starts. At the time, we were only expecting a one-year low in new home starts through October 2021. The numbers didn't prove to be good for builders, but the news was not so bad for consumers either. Nationally, home building and sales were up three percent over the year.
As mentioned, home building permits were up three percent in the fourth quarter of 2021 versus a one-year low. That means permits could have increased more than seven thousand units. It also means there may be an over abundance of certain types of housing starts. There are now more multi-family units than single-family units in the United States. This is good news for buyers who can now afford a larger house, and home builders who can get the work done without waiting on slow market prices. View here for more details on home builders.
In order to make room for more new homes, and home building materials to make sure construction occurs, there are now over eight million jobs in the construction industry. While this is good news for workers, it poses problems for homebuyers because it means homes can take longer to be built. This means home prices cannot keep going up forever. But hopefully these issues will correct themselves by the time the end of the year rolls around in 2021. .For a general overview of this topic, click here: https://www.encyclopedia.com/history/united-states-and-canada/us-history/real-estate-industry.
