U.S. Real Estate and Construction Industry Trends

In early 2010, real estate had shown signs of improvement in some markets in the U.S. and several important trends will shape the real estate industry in the near future.

This year, the National Association of Realtors (NAR) estimates that existing home sales in the U.S. will climb to 5.02 million from 4.69 million in 2009 and 4.91 million in 2008, although these numbers are down from 6.48 million existing homes sold in 2006.

According to the NAR, the median sales price for an existing home in the U.S. in 2006 was $221,900 compared to $219,000 in 2007 and $198,100 in 2008. Mortgage Bankers Association estimates that the price was $172,800 in 2009 and would drop to $170,100 in 2010.

According to the U.S. Census Bureau, as of February 2010, approximately $846.2 billion in new construction was put in place at a seasonally-adjusted annual rate, compared to the yearly peak of $1.16 trillion in 2006. The U.S. Census Bureau also estimates that only 433,600 single family homes were started in 2009 compared to 622,000 in 2008, a major decrease compared to 1.75 million new homes started in 2005.

As of April 2010, the Mortgage Bankers Association forecast new single-family housing starts to total only 556,000 for 2010, growing to 790,000 in 2011 and 1,058,000 in 2012.

Sales of new construction, single-family homes fell to about 374,000 in 2009 compared to 485,000 in 2008 and 1.05 million sold in 2006, according to the U.S. Bureau of the Census.

As of 2009, the U.S. Bureau of Labor Statistics estimates that 6.0 million Americans were employed in the construction industry, down from 7.2 million in 2008. They also estimate that 1.4 million Americans were employed in the real estate industry, down from 1.5 million in 2008.

At the end of 2009, there was $14.3 trillion in outstanding mortgage debt in the U. S., down from $14.6 trillion in 2008. However, many home mortgages remained in arrears as 2010 began and mortgage owners will continue to suffer write downs.

According to Plunkett market research, we are are likely to see a rebound in home sales by 2011 or 2012, However, many homeowners and commercial property owners will remain in a difficult position as their properties have a current value of less than what was paid and many mortgage debts are higher than what those properties are worth.