If housing were a professional sport, newspapers would be full of praise right now for its heroic performance. Cities would be throwing ticker-tape parades. Fans would be lining up to buy season tickets. Columnists would be campaigning to give housing the most valuable economic player award.
The numbers certainly support this view. Housing directly accounted for one-eighth of GDP growth during the first six months of our economic recovery. If you consider the collateral benefit of starts to industries such as furniture and appliances, the percentage rises to one-fifth, according to NAHB estimates.
This is no flash-in-the-pan performance. Home building, like a great player during a stretch drive, carried the economy on its back during the recession. Now it's leading the economy into prosperity. It's a performance worthy of the Economic Hall of Fame.
Clearly, this is an industry that doesn't rest on its laurels. Builders put a great product on the field in 2003, creating considerable wealth for those who purchased a home this year and in previous years. By mid-year, American homeowners had accumulated $7.6 trillion in housing equity, defined as the value of their home minus the debt they carry to own it.
This equity helped prop up the economy, too. Homeowners refinanced at today's low interest rates and took some equity out of their home. As a result, they poured a record amount of this equity back into the economy last year, nearly $100 billion by one estimate. Much of it fueled remodeling activity, another unsung economic hero.
The industry's biggest achievement, though, may be on the employment front, where it has created precious jobs. Through July, the overall economy was still shedding jobs. Total payroll employment was down 0.3 percent year over year. Construction employment, by contrast, was up a whopping 5.6 percent.
To its credit, even as the industry put a record number of buyers through the gate, it kept its economic house in order. New-home sales may reach nearly 1 million this year. Yet inventory remains remarkably low, at less than a four month supply.
As one season winds down, and planning for another begins, the signs point toward another great year in 2004. After a short panic this summer, the bond markets settled down and mortgage interest rates fell back to the 6 percent level, where the NAHB estimates they should stay until the spring.
The long-term outlook is equally bright. A new 10-year forecast by the association puts average annual housing production (single-family, multifamily, and manufactured) in the ballpark of 1.9 million units. That level of production, which would exceed this year's output, would be higher than what the industry achieved during the 1980s and 1990s. It would rival production during the robust 1970s.
In sports, as in business, it doesn't pay to gloat over a great performance. But builders should be proud of their record in sales, employment, and wealth creation. This was the perspective that was lost several years ago during the political furor over rapid, unplanned growth.