Business: Bellwether Industry? | TIME

TIME

May 26, 1958 12:00 AM GMT-4

“Homebuilding may be the industry which will lead us out of the recession,” said Nels Severin, president of the National Association of Home Builders, last week.

Severin announced at the association’s annual meeting in Washington that.a survey of U.S. home builders showed that they expect housing starts in 1958 to rise 10% above last year to some 1,100,000 new units. The majority of home builders at the meeting thought business is better now than last year; they look for further improvement over the next six months, particularly in the market for lower-priced houses. In assessing their individual prospects, they were even more optimistic: they predicted their own businesses would be up 33%.

Economists are keeping their fingers crossed about housing and its capacity to lead the’economy into an upturn. In the 1949 and 1954 recessions, housing upturns were bellwethers for the economy. But some economists suspect that housing may no longer be a completely reliable economic indicator. Reason: like many another industry, housing has had the cream skimmed off the top of its market, cannot depend on the backed-up demand that helped it weather the last two recessions.

Home builders, who have learned a lot about selling in the recession, are aware of the change -and consider it a challenge. With the need for adequate housing already essentially filled, the housing industry is making a fundamental shift. Builders are now concentrating on improving their houses and giving the customer more for his money. The median sale price of a house, for example, has dropped from $14,950 to $14,350, the first drop in four years -and the builders are supplying a larger house for the price despite the increase in costs.

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