Some Good News on the Home Front
By Jeff Pinkerton
The national housing market showed some surprising strength with the release of September’s home building starts earlier today. Housing starts are up 15 percent from August’s numbers and permits are up 11 percent. All told, work started on 872,000 new homes last month. This is clearly a welcome development for the economy for a couple of reasons.
First, it is obviously great news for the construction industry, which was hit particularly hard during the recession. Constructing new homes to meet increased demand will bring back good-paying construction jobs. New construction also boosts sales for manufacturers of home building material, appliances and furnishings.
Second, as housing demand increases, homeowners should begin to feel more confident that their existing homes may once again increase in value. For many American families their home is their most valuable asset and seeing that investment rise in value will boost consumer confidence.
We are seeing a similar turnaround in the local housing market. Through August, local building permits are up 35 percent over the same point last year.
Looking at MLS home sales data from the Kansas City Regional Association of Realtors, we see total sales topped 2,700 in August. This is the highest point since spring 2010. Home prices have been climbing as well. The average sales price of an existing home in the Kansas City area rose 7 percent between August 2011 and August 2012. New home prices are up 3 percent over the same period.
These are solid, long-term trends that point to a much-needed improvement in the housing market and construction industry. Housing has taken much of the blame for the 2008-09 recession, but it looks like it could now be a leading contributor to the economic recovery.