Home building shows signs of recovery after slow spring

The U.S. Department of Housing and Urban Development recently released a report on new residential construction for June 2011, which found a 14.6 percent increase in construction from May to June.

According to the report, apartment construction jumped 31.8 percent in June, in response to the high demand and low vacancy for rentals. Single-family home construction rose 9.4 percent, while building permits increased 2.5 percent indicating future plans for construction.

The Associated Press reported that new home construction is a vital source of jobs and taxes, and has a significant impact on the economy. Builders are competing with rock bottom-priced foreclosures, short sales, restrictive loan requirements and and weak new-home sales nationwide. The news source reported that median prices for re-sale homes are 30 percent lower than the median prices for a new home.

Bloomberg reported that as unemployment levels continue to increase and lenders further restrict access to credit, consumers will have less confidence to purchase a home, much less a new one. As a result, many families have turned to the rental market instead.

Chairman of the Federal Reserve, Ben Bernanke, spoke to the House Financial Services Committee last week saying that distressed properties on the market and a poor employment report are restricting home prices from recovering.

"The demand for homes has been depressed by many of the same factors that have held down consumer spending more generally, including the slowness of the recovery in jobs and income as well as poor consumer sentiment," he told Congress.  

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