Dive Brief:

• Residential building should continue to rise in the coming years as the inventory of existing homes continues to shrink and more buyers turn to the new-home market, insurance company Euler-Hermes says in a new report.
• Commercial construction will continue to come back from 8.5% annual decreases during the recession, but the recovery will be slower than in home building because the pool of existing vacant space has not been drained as much as has the pool of existing homes.
• Economic uncertainty is a general risk, and home building is sensitive to a continued rise in interest rates, which could brake the climb.

Dive Insight:

The company, which provides insurance on credit extended by sellers in all businesses, says it sees the rise this year in mortgage rates as having spurred buyers of existing homes to move while making buyers of new homes hesitate. First-time buyers are a significant percentage of new-home buyers and are likely to have to stretch harder financially than those buying for the second or third time, making rate increases a bigger problem for them. The existing-home sales increase is likely due to patient buyers feeling that they had seen a bottom in rates.