Wall Street secured more positive ground today as investors gained confidence in the global market that’s been, to say the least, a wild and frightening ride. The Commerce Department today reported a better-than-expected increase in new home construction, news that acted as both a safety net and catalyst for the U.S. stock market.
According to the Commerce Dept., construction of new homes and apartments hiked 22.2 percent to an annual rate of 538,000, far surpassing economists’ forecasts of a pace of 450,000 units, which was influenced on January’s pace of 477,000. Though the report fanned the flames of the current market rally, some economists warn that the numbers don’t necessarily signal we’ve hit and are bouncing back from the bottom of the residential construction market - we’re still down 47.3 percent from February of last year’s numbers.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, told the Associated Press, “This is a temporary rebound, not a recovery.”
Other economists, however, believe the bottom is close. “While it may be premature to call an absolute bottom in residential construction, we are clearly getting close,” Adam York, economist at Wachovia, told the Associated Press.
Regardless of how you swallow it, the increase in housing construction, whether it’s the recovery or rebound, still proves the market’s resilience. The burst of the housing market two years ago began the unraveling of the nation’s market, finally leaking onto the global stage. A small rebound could bolster just enough confidence in the market that consumers and investors come out from the shadows and back onto the street.
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