Depressed New Home Construction Activity Weighing Down the Larger Economy

When the NEW HOME CONSTRUCTION numbers come out next week will be discussing far more than how many house are being built. Depressed construction activity is expected to continue weighing down both housing as a whole AND the larger economy. In a normal environment, we see 1.7-1.8 million new home build each year. We’re not even close to that rate and won’t be for some time. Construction employment is 1-2 million below trend levels. Consequently, the unemployment rate remains elevated and economic growth lackluster. We won’t see an economy operating at full potential until sometime after 2015.