Signs Of Improvement In Residential Construction

Despite tepid wage growth in the US and Dodd-Frank-driven headwinds for mortgage lending (see post), two signs point to moderate improvements in residential construction.

1. The homebuilder optimism index recovered more than forecast.

 

2. Lumber futures have risen materially from their lows in June.

At this point it is difficult to say whether this construction improvement relates to new home purchases or new rental units. Given the looming rental market shortage in the US (see post), we are certainly going to see more apartments built in the near-term.

And while nobody expects a major boom in construction employment across the country, there is definitely room for improvement.