During the heyday of America’s maximum retail sector surge (1996–2006), residential construction and the massive expansion of the automotive sector were at the top of the heap. In addition to the speedup of America’s gross domestic product of goods and services during this time frame, the U.S. was witnessing the peak of a population explosion that doubled its people count from 160 million in the mid–20th century to 320 million today.
Consequently, the automotive industry has broadened its U.S. market position, primarily due to additional Japanese, Germany, and South Korean automobile manufacturers setting up “finishing departments, mostly in non-union Midwest and Southern states, and has reached its pre-recession annual total of 16 million cars sold in the U.S. Residential home construction, however, has badly lagged its previous high point of 1.7 million single family annualized home starts.
Currently, residential construction has struggled to reach one million annualized starts, with most of these devoted to metropolitan leased apartment units, or as homes for leasing in smaller and rural communities. However, the fact that total housing starts fell 2.8% in October from a month earlier, while single family home units’ new construction rose 4.2% in October—the best pace since June 2008— is indicative of a major return shift to traditional single family startups, that year-over-year shows a 5.3% improvement currently.
The factors that are generating this switch to the more traditional homeowning of American families are as follows:
- The federal government, in conjunction with Federal Reserve Board approval, has started to lighten up on maximum down-payments, and the overly strict regulations, in the wake of the earlier loose requirements that generated a flood of foreclosures.
- With overall national job improvement, an increasing number of fully-employed job holders are committed to permanent homesteads in their new locations.
- While rental and residential leasing are still the predominant factor in the reduced level of family housing construction, the ongoing job improvement and lifestyle, especially with the “millennials,” who accounted for the highest rental/leasing commitment shift, has also been abetted by substantially higher rentals in both metropolitan and suburban living space.
While the 1.7 million annualized units of the late 1990’s and early 2000’s are nowhere in sight, as the million mark is the current norm, a steady improvement in the present trend is an encouraging sign of a steadily improving economy.
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