As a leading economic indicator, residential investment can signal when the economy is about to slide into a recession and when the economy is returning to normal after a downturn. Beyond being merely an indicator, investment in residential construction has traditionally played a crucial role in stimulating growth after a recession. While the Great Recession was the result of a large number of interrelated factors, one explanation for its extended duration is that the devastated housing market has shown virtually no sign of improvement. From the beginning of 2006 through the end of 2008, new single-family home sales declined steadily reducing the volume of sales to one third of its former size. Over the three years from 2009 through 2011, new residential sales held constant, but showed no signs of growth. The absence of this important catalyst of economic growth offers at least a partial explanation for the very slow rate at which the nation has been recovering from the Great Recession.
In 2012, the new residential housing market started showing signs of growth. Fannie Mae has projected that by the end of 2013, new single-family home sales should approach an annual rate of nearly half a million. That’s good news for Utah. As the health of all state economies are tied to the health of the national economy, the recovery of the new residential housing market nationally bodes well for the future economic growth of the State of Utah.
