New construction still depressed, but a wave of remodeling

There was a slight uptick today in the index tracking homebuilder confidence, but the number is still extremely low. We’re not going to see any significant increase in new construction of owner-occupied units until much more inventory is absorbed. That’s true for the nation as a whole and for the Savannah area.

We might, however, see a significant increase in the building of rental units, even of ones that look like ordinary for-purchase single-family homes.

And we are already seeing a significant change in the pace of remodeling. Here’s yet another great graph from Calculated Risk:

This is pretty dramatic. You can see the seasonal variations here, with considerably more remodeling in the late spring through early fall. And you can see the significant decline during the recent recession. But look what has happened over the last year.

We’re seeing fewer mass layoffs, so many workers are more confident in their jobs. Those with money to invest don’t know where to put it that will offer a safe return. Some retirees have given up on selling and moving. Some would-be step-up homebuyers have decided it’s better to improve their existing properties than to put their homes on the market.

And so forth.

This is one clear bright spot in the economy, and those with the appropriate skills should be aware of this surge.