Housing rebound might produce 500,000 jobs in 2013
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ATLANTA - Paul Laney landed a job two months ago as a home inspector in nearby Woodstock, as the city added staff to oversee a growing residential construction industry. "I am really ecstatic about it," said Laney, 52, who closed his own contracting business in 2007.
At a 19-home development being built by Windsong Properties off Main Street in Woodstock, about 30 miles north of Atlanta, people are being hired to sell homes, underwrite mortgages, install garage doors and security systems, and inspect finished construction.
A rebound in homebuilding after a six-year slump should generate as many as 500,000 jobs in 2013 and 700,000 in 2014 including related services, estimates Russell Price, a senior economist at Ameriprise Financial Inc. in Detroit and the top forecaster of employment for the past two years, according to data compiled by Bloomberg.
"Housing is like a coiled spring" driven by "a lot of pent-up demand," said Glenn Hubbard, dean of Columbia University’s business school in New York, who was chairman of the White House Council of Economic Advisers under President George W. Bush. "It is a real source of strength in the economy -- from construction jobs and all the vendors who play into it."
About half the jobs created by homebuilding are outside of construction, estimates the National Association of Home Builders, a Washington-based trade group. More than three jobs are created for each single-family home built, including related work, a 2008 study by the group estimates.
"A revival in new home construction will have a huge stimulative effect on the larger economy," said Brad Hunter, Palm Beach Gardens, Fla.-based chief economist for housing research firm Metrostudy. "When home construction goes up, so does demand for furniture, tile, lumber, concrete, draperies, paint, and appliances of all sorts."
Price gains on existing homes in markets led by Atlanta, Las Vegas, San Francisco, Phoenix, and Fort Myers, Florida, will benefit home builders, said brokerage firm Sterne Agee & Leach Inc. analyst Jay McCanless in Nashville, Tennessee. That will allow home builders to raise prices, and prompt some shoppers to look more closely at new rather than existing homes, McCanless said.
Single-family housing starts are likely to rise 18 percent to 632,000 in 2013 from a year earlier, and by another 26 percent to 796,000 in 2014, forecasts Hunter. Single-family starts fell 75 percent from the 2005 peak of 1.7 million to 2011’s low of 430,600.
Construction companies added 18,000 workers last month after a 49,000 surge in February that was the biggest in almost six years, a Labor Department report April 5 showed. As payroll growth slowed in March to 88,000, the smallest gain in nine months, construction added jobs faster than the overall market.
Yet the increase in construction jobs so far has lagged new activity because workers have had their hours increased, said David Crowe, NAHB chief economist in Washington. Weekly hours have risen to an average of 36.8 the past year, the highest since December 2006.
"We have seen increasing hours, but there is a limit to that," he said. "I’m expecting to see a more direct correlation between increases in housing starts and increases in construction employment."
The Federal Reserve, which is been buying $40 billion a month in mortgage-backed securities and $45 billion in Treasury bonds to lower long-term interest rates, said last month that housing has "strengthened further." In an El Reno, Okla., speech April 4, Kansas City Fed president Esther George cited rising housing starts and said low inventories were contributing to more building.
While construction may account for about 5 percent of the U.S. economy, it has "a big impact on both total output and employment," St. Louis Fed president James Bullard told reporters April 3.