There have been signs pointing to the construction industry – one of the last industries to recover after the recession – finally starting to grow this year. With building permits up and existing home sales rising, it looks like they are poised to experience growth immediately.

In March building permits, usually indication of construction work on the way, went up to 594 from 534 according to Conference Board. Pending-home sales rose 5.1 percent and existing-home sales increased 3.7 percent. Money from these sales are often used to purchase new homes and help drive construction.

However, economists warn that construction won’t see a strong growth until next year despite an upward forecast in both permits and sales. These increases are either not particularly special in the larger scope or were anomalies caused by insurance changes.

“These are all good news but not enough to lift the spirits of the builders,” said David Crowe, chief economist at National Association of Home Builders. He points out that builder confidence has held at 16 for the five of the last six months. That’s out of 100.

Properties are still difficult to sell and bank restrictions are keeping it hard for people obtain mortgages causing the builder confidences to remain low. In addition, builders are competing with foreclosed homes. All these factors are also severely hindering the housing market and in turn the construction industry.

“The permit numbers were up in March than they were in February, but February was probably the worst month we had in housing probably since the 1940s,” said Patrick Newport on investment and housing sectors at IHS. “The fact that things were better March isn’t telling you much”

The existing home sales rose in March and will continue to rise in April because of adjustment in FAJ insurance policies. To avoid the penalty, buyers are rushing to get houses before April 18. And we will see a sharp decline of purchases in June.

Investors and not homeowners are driving this market. They are either attempting to sell the homes to make a profit, which is difficult in today’s environment, or refurbishing them as rentals.

Nonetheless, construction will begin rising sharply as soon as next year despite these false starts according to Newport. As buyers will grow more confident while more people find employment.

In addition, construction has been low for the past two years. Despite so many residential houses still available in the market from before the recession, more will be necessary to for the growing population.

“Although there is still an abundance of inventory on the residential side, this will gradually be absorbed and construction activity will increase,” said Jeannine Cataldi, senior construction analyst for IHS. “The same is true on the nonresidential side – space will be absorbed and new construction will be seen.”

Construction in the coming future will probably be aimed for the growing young members of the population who are inclined to rent. Even if construction companies are not building residential family homes, this work is still good for the industry.

However, commercial structures like offices will not pick up until 2014. Office space is still in abundance especially while people are unemployed. Companies see no need to build more until their workforce grows and they would need to expand, which still looks to be a slow process.

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