Here Comes Housing's Rebound

"We will come back big time on employment when residential construction comes back," Warren Buffett said last year. "You will be surprised, in my view, how fast employment changes when that happens."

Well, look what happened this morning: Housing starts -- initial construction of new homes -- surged 15% to the highest level in four years:

Source: Department of Commerce.

September housing starts came in at an annual rate of 872,000. That was the highest since July 2008, and nearly double the pace seen at the bottom in early 2009.

As Buffett points out, don't underestimate how important a boost this could be for the economy. A home is the most expensive thing most people will ever purchase, and the amount of consumption and labor that goes into construction can spread throughout the economy as investment and spending begets more employment. It's a boost not only for the housing industry -- it's exactly why homebuilders like KB Home (NYSE: KBH  ) and Lennar (NYSE: LEN  ) have surged this year -- but nearly all domestic industries.

Today is a terrible day for the declinists.

Fool contributor Morgan Housel has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2061704, ~/Articles/ArticleHandler.aspx, 4/19/2014 5:47:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement