Home Construction Spurred by Fewer Distressed Homes

By Sari R. Updated on 10/22/2012

Positive housing statistics show that home sales are up from a year ago.  Fitch Ratings states that these percentages should be compared with economic and employment concerns.  What does this mean?  Essentially, the country might be showing signs of a housing recovery, but there are too many additional factors that prevent the full end of real estate troubles.

Homebuilders are undoubtedly benefitting from this decrease of distressed assets and increase of rent prices.  The benefit has been noted in the form of an increase in home construction.

The Commerce Department stated last week that home construction grew 15% in September 2012.  Existing home sales fell during this month, but they are still significantly higher than September 2011.  New construction statistics can often be unpredictable as they are in constant fluctuation.  Starts have been more impressive for the past few months, but analysts are still hesitant to suggest that a V-shaped recovery of the housing market is coming.

The very fact that rental prices are increasing on the daily and there is little competition from distressed home sales will drive homebuyers to start building hew homes.  Analysts believe that single-family housing could potentially rise up to 19% in 2012 while existing home sales are forecasted to increase by 8.5% for this year.

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