The most fortifying news for home builders is that after three-and-a-half straight years of reducing GDP growth by an average annual rate of roughly 1%, residential construction is no longer a drag on the economy. Residential fixed investment, which is housing’s share of GDP, grew a robust 18.9% in the third quarter and continued at a healthy clip of 5.7% in the final three months of 2009. Of course, it should also be kept in mind that the first GDP numbers we see for any quarter are advance estimates that are subject to revisions, sometimes substantial, as more data become available.

To gain an even more realistic perspective on the robust-appearing advances that recently have been registered in the general economy and residential construction, it also must be acknowledged that these improvements are coming off extremely low levels of activity.

By many measures, at the bottom of the recession housing production reached its lowest levels since the 1940s, and a couple quarters of positive news have hardly restored it to full health. Meanwhile, nonresidential construction, which held up fairly well through most of the recession, has now fallen for six straight quarters, tumbling at a rate of 18.4% in last year’s third quarter and 15.4% in the fourth.

This can’t be good for the stability of the financial institutions that have been making nonresidential loans, and unfortunately these tend to be many of the same lenders home builders have relied upon for the credit they need to develop and build their projects.