With the U.S. economy slowing, everyone is looking for good news amid the depressing statistics. Here are some uplifting numbers: .22 percent. That is how much residential investment, including home building and renovations, added to the annual 1.5 percent growth in GDP in the second quarter. This is cheering to home insurance companies and others.
HOME INSURANCE SALES UP IN A BAD ECONOMY
It means that for the second straight quarter, housing contributed to economic growth. The first quarter’s housing contribution was almost twice as much—.43 percent—but the overall GDP growth rate was greater in that quarter. Moody’s Analytics predicts that for the year, home construction will add .3 percent to the nation’s gross domestic product. www.PremierHomeownersInsurance.com
Home insurance providers also are heartened that second-quarter new home sales were up about 3 percent, with sales a whopping 20 percent ahead of the second quarter of last year. On the other hand, new home sales actually fell from May to June. If the June rate continues for the rest of the year, some 350,000 new homes will be bought in 2012. A typical annual home sales figure for the U.S. industry used to be 1.5 million.
HOME INSURANCE PROVIDERS HAPPY WITH SALES
But that higher level of home transactions is not expected to return for several years at best. Foreclosures remain a market drag, and a relatively large slice of homeowners who avoided foreclosure have too little equity in their homes to sell and move up. Consequently, the pool of active buyers is shallow and sales activity remains iffy.
Where this places home insurance providers is in a place not imagined just a few years ago. While there are pockets of fairly impressive housing construction activity across the U.S., most of the country remains in the home-building doldrums. Insurers will continue to service policyholders, of course, including when homeowners renovate and upgrade, but the prospect of substantial new gains in residential business remains bleak.
Home insurance providers are rolling with the punch. They are happy to see consecutive months of substantial housing investment, a good trend. They are prepared to service new home customers when they show up. Yet there is no escaping the fact that the U.S. economy is slowing, rather than growing.
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