US home construction expected to show moderate gain in November

Industrials Associated Press

The Commerce Department reports on U.S. home construction in November. The report will be released at 8:30 a.m. EST Tuesday.

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HOUSING GAINS: The expectation is that home construction increased 1.6 percent to a seasonally adjusted annual rate of 1.025 million in November, according to a survey of economists by data firm FactSet.

OCTOBER DIP: In October, construction of new homes fell slightly, dropping 2.8 percent to a rate of 1.009 million. That dip came after housing had surged 7.8 percent in September.

The weakness in October was driven by the volatile apartment sector which offset a gain in single-family home construction.

Analysts are looking for further gains in new home construction in the months ahead, expecting that solid gains in employment will give more consumers the confidence to commitment to buying a home.

The National Associated of Home Builders/Wells Fargo builder sentiment index took a small dip in December but remains in positive territory. The index reading in December was 57, down one point from a reading of 58 in November.

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Any reading above 50 indicates that home builders view sales conditions as good, rather than poor.

Analysts are forecasting that the housing market will continue to improve at a slow, steady pace in 2015.

While still a long way from the boom years of the previous decade, housing has been posting a sound recovery over the past two years.

New home sales reached an annual rate of 458,000 in October, the highest point since May, while home prices continued to climb, increasing to a median price of $305,000 in October, up 16.5 percent from a year ago.

The gains in home prices have held back some says, particularly among first-time home buyers. Many lack the savings and strong credit history needed to afford a home. Tighter credit standards for potential home buyers and flat wage gains have also acted to dampen home sales.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenues, according to NAHB data.