Wall Street secured more positive ground today as investors gained confidence in the global market thatâ€™s been, to say the least, a wild and frightening ride. The Commerce Department today reported a better-than-expected increase in new home construction, news that acted as both a safety net and catalyst for the U.S. stock market.
According to the Commerce Dept., construction of new homes and apartments hiked 22.2 percent to an annual rate of 538,000, far surpassing economistsâ€™ forecasts of a pace of 450,000 units, which was influenced on Januaryâ€™s pace of 477,000. Though the report fanned the flames of the current market rally, some economists warn that the numbers donâ€™t necessarily signal weâ€™ve hit and are bouncing back from the bottom of the residential construction market - weâ€™re still down 47.3 percent from February of last yearâ€™s numbers.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, told the Associated Press, â€œThis is a temporary rebound, not a recovery.â€
Other economists, however, believe the bottom is close. “While it may be premature to call an absolute bottom in residential construction, we are clearly getting close,” Adam York, economist at Wachovia, told the Associated Press.
Regardless of how you swallow it, the increase in housing construction, whether itâ€™s the recovery or rebound, still proves the marketâ€™s resilience. The burst of the housing market two years ago began the unraveling of the nationâ€™s market, finally leaking onto the global stage. A small rebound could bolster just enough confidence in the market that consumers and investors come out from the shadows and back onto the street.