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Survey: Low Job Growth Hampers Homebuilding

On Monday financial analysis firm ""Zelman & Associates"":https://www.zelmanassociates.com/Library.aspx?ParentID=52&ReportType=5 released a survey signaling mixed results in the homebuilding industry, with new home orders grinding to a halt in May despite 20 percent year-over-year increases.


According to the survey, many builders cast blame for the sluggish order volume on rickety market conditions. A ""CNNMoney"":http://money.cnn.com/ report undermined hopes that job growth would remain steady. Coupled with dipping mortgage rates, the report suggested that fluctuating long-term economic conditions keep expectations for improvement and confidence low ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô this despite the fact that homebuilders saw their orders rise from double-digit year-over-year declines to double-digit gains.

The survey reported that builder sentiment gravitated towards stability, with an industry score topping off at 32.3 on a 0-100 scale, up from 29.6 in May.


The Washington, D.C., builders' market remained top dog, while other regions rose only incrementally, staying consistent with the ""Fed's"":http://www.federalreserve.gov/ Beige Book, which documented ""widespread weakness"" in the housing and home construction markets last month.

Texas and the Bay Area outpaced other markets as well, buoying June net orders so that new home construction activity crested at 19 percent in year-over-year averages.

With total homebuilding starts hovering at 613,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a notch above estimates that it remained stagnant at 550,000 ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô 83 percent of homebuilders and their contacts reported flat to somewhat higher prices, even as deflation seemed to slow to a glacial pace. Meanwhile, material costs continued their northerly trend for the eighth consecutive month.

Jay Brinkmann, chief economist for the ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm, calls this kind of activity a positive trend for the homebuilding industry ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and the economy at large.

""Ultimately the sign of recovery will happen when we see new housing construction,"" he says, going on to explain the bigger picture that home construction data reflects.

""In a normal recovery you would see the housing recovery pick up at this point and new construction that in the past has been a big source of jobs,"" he adds. ""What was different about this recession is that usually we have a housing market that's damaged by the recession. This time we had a housing market that collapsed first and was in some ways a cause of the recession. So if you go into the recession with a crippled housing market, it's going to be different.""