'Bad' housing numbers might reflect good news
Housing starts were down sharply in the South. One expert cited the booming Texas job market as as explanation: builders are having trouble finding construction workers.
The Census Bureau's new monthly report on housing starts shows they were down in June — by more than 9 percent. Headlines asked, "where's that housing recovery?" But it's a big country, and housing trends vary a lot from place to place. That was especially true with these numbers: Housing starts actually rose in most of the country — except in the South, where they fell hard.
Experts weren’t sure why. “I think some of us are still scratching our heads over what this really means,” says Dave Ellis, executive vice president of the Greater Atlanta Homebuilders Association.
He offers one possible reason: Building lots are harder to come by than they were in the wake of the financial crisis. For a while, banks had a big supply of land that had been poised for development. “The lots were pretty much ready to go,” says Ellis. “Now, in most markets, those lots have gotten pretty much worked through, and they’re beginning to develop land again.”
That’s in line with observations from Brad Hunter, chief economist for the housing-market research company Metrostudy. He thinks North Carolina’s harsh winter got in the way of development: the work that needs to happen before home construction in a new subdivision. “You have to create the backbone of the subdivision, pave in the roads, put in the electric and water— all that infrastructure,” he says. “So that is what really got slowed down in the winter.”
David Crowe, chief economist for the National Association of Homebuilders, thinks the big issue is a shortage of labor, more than land. He talked with homebuilders in Texas and Oklahoma, where the energy industries— oil and gas— are taking every available worker. “They were just having an awful time getting labor,” says Crowe. “Texas is a big state anyway, and so movements for that state would affect totals for the whole South.”
So, bad news — fewer housing starts— sounds like good news from another perspective: lots of jobs.