February housing starts dropped 1.1% from January’s level,
but permits for housing construction rose 5%, according to the Department of
Commerce numbers. After earlier recessions in the U. S. economy, housing
construction accounted for 15% or more of economic growth. Since this recession
officially ended in June 2009, housing construction has accounted for only 4%
of growth in the American economy.
In today’s market, new home sales are competing with deeply
depressed prices for foreclosed and short sale homes, severely restricting the
historical contribution of new housing construction to economic recovery. In a
healthy economy, a new home typically sells for
15% premium over a comparable existing house. Today that premium has
doubled to 30%. According to the
National Association of Home Builders, each new home creates three jobs for a
year, and generates $90,000 in tax revenues to various government units.
Without this stimulus, our economic growth has stagnated at alarmingly low
rates.
