According to a Reuters survey, new construction of homes in the United States and permits for future buildings are on the rise. The actual numbers are supposed to come out today.

Chief economist Chris Low from the FTN Financial group in New York said, “New home sales have improved in recent months and new home inventories are likely to fall to a 27 year low in September, but there are still about twice as many existing homes on the market as there were the last time sales were this weak, suggesting it is still a very difficult environment for homebuilders.”

Luckily, the housing market may actually be showing signs of getting better. The housing market is the worst that it has been since the 1930’s and the slump actually began in 2006 but didn’t become widespread for a few years.

“We forecast residential investment will add to growth in the third quarter, the first positive contribution since the fourth quarter of 2005, and contribute an average of 0.8 percentage points to quarterly growth next year,” said Michelle Meyer, an economist at Barclays Capital in New York.

“As for home prices, we believe the freefall has decidedly ended but that it is too early to call the bottom. Moreover, foreclosures are likely to flow into the market at an accelerating pace, weighing on prices.”

Like the cash for clunkers program, there is a government incentive for new home buyers right now. There is an $8,000 government tax credit for those buying their first home that is set to expire next month. There are also expected to be more foreclosures on the market throughout the end of the year. When there are more foreclosures on the market, new homes won’t sell because many buyers find foreclosures can be too good of a deal to pass up.

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The housing market has been feeling a pinch for awhile now. The home improvement stores are also feeling the problems associated with a decrease in the housing market and new home construction as well as renovations.

To help with the decrease in profits, Lowe’s will be opening fewer stores in 2009.

From the AP:

The nation’s second largest home improvement chain said consumers continued to shy away from big-ticket items such as new flooring, appliances and cabinetry, particularly as they try to shore up their savings and find it more difficult to tap into home equity lines of credit.

Sales of discretionary categories — particularly for items such as home organization, plumbing, lighting, and windows and walls categories — fell to decade lows.

More than 2 million households received foreclosure filings last year and some economists estimate as many as one in four homeowners owe more money on their mortgages than their properties are worth. President Barack Obama has proposed a $75 billion plan to curb foreclosures and ease the housing slump that helped ignite the recession.

“Anytime you can put the consumer in better financial shape, by having more disposable income in their pockets, lessening their debt burden … all those things help,” Lowe’s Chairman and Chief Executive Robert Niblock said Friday. “Is what you’re seeing going to be enough to cause a dramatic turnaround in the environment? No, we don’t think so. It just makes the environment less bad.”

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