The weather heat map is all red today across the country. The best course is to stay indoors with the air conditioner on, and postpone lawn mowing for another day.
Yet, there are construction workers with hard hats and hammers pounding away outside. In reviewing home construction activity by each month, there is no discernible trend of holding back construction in the summer in very hot places like Phoenix or Dallas. Homebuilding is more impacted by market conditions of bubble and collapse, but not heat.
The following chart shows the raw counts of housing permits issued by each month in the Greater Phoenix area. Note that the big swings in data are over several years, such as the sharp rise from 1982 to 1984 and the sharp decline from 2005 to 2010. The small month-to-month changes are all but invisible in the bigger multiyear trend. A closer inspection of the monthly data shows more building in March in some years, but also more building in July in other years. There is nothing to indicate that workers want to cool off during summer.
The same type of phenomenon of long-term dominating short-term weather trends is also observed in Houston and Atlanta. If anything, there appears to be more activity in summer compared to winter.
Though construction workers evidently can take on the heat, they are unwilling to freeze. There are definite big seasonal swings in housing permits in cold weather cities such as Minneapolis, Milwaukee, and Buffalo. Much more activity occurs in late spring to autumn before pretty much going into hibernation in winter.
For most of us who have indoor jobs, we should be quite grateful. As mentioned frequently in these columns this year, without the current U.S. housing recovery, America may be facing a similar mild recession like that occurring in Europe. So let’s give big thanks to those wearing hard hats as they are contributing to U.S. economic growth.
Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.
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