Housing Continues Its Positive Economic Streak

By at 18 December, 2019, 11:48 am

by Raymond J. Keating-

The U.S. Census Bureau report on November residential construction continued to point to solid growth in the housing sector.

Housing starts in November 2019 grew by 3.2 percent over October, and were up by 13.6 percent compared to a year earlier. As noted in the following graph, housing starts have shown solid growth since early this year.

Source: Federal Reserve Bank of St. Louis, FRED

Meanwhile, building permits (a gauge for future housing construction) in November were up by 1.4 percent over October, and up by 11.1 percent versus a year earlier. In particular, as noted below, permits have been up strongly since June of this year.

Source: Federal Reserve Bank of St. Louis, FRED

The recent positive trends on both housing starts and permits continued in November, and that’s good news for the economy and for small business. Regarding GDP growth, while business investment has faltered recently, residential investment showed nice growth in the third quarter. Indeed, one could argue that all of GDP growth in the third quarter was accounted for by the consumer and by the housing sector.

Good news on housing is good news for small businesses, given that  97.4 percent of employer firms in the residential building construction industry have fewer than 20 employees.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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