The number of new homes starting to be built could soar and it’s coming at the perfect time for banks

Housing home development
A rise in housing permits could mean a swell in lending on Wall Street. Wikimedia Commons

The number of new homes starting to be built in could be poised to grow.

If that happens, it’s good news for homebuilders and for the US consumer. But it’s even better news for Wall Street.

Building permits soared last month and expected projects have homebuilder sentiment topping economists’ expectations.

Meanwhile, prospective minority homeowners have a much brighter outlook on home ownership than a year ago.

Overall, more Americans are ready to buy a home and Wells Fargo is expecting this year to be better for homes sales than 2014.

Plus, home prices in many areas are on the rise.

Here’s the good news in chart form:

FRED data
Housing permits rose sharply in the month of May, signalling good news about the US economy. FRED data

We are still a long way away from the homebuilding peak that preceded the financial crisis. But for big banks looking to regain a foothold as lenders, the rise in permits and the expected increase in sales would help boost revenue.

As the chart shows, housing permits in the US plunged in the wake of the financial crisis and never fully recovered.

That’s because a healthy portion of the homes being built in the years leading up to the crash were being sold to borrowers that probably shouldn’t have been allowed to buy a home in the first place.

Right now, many big banks on Wall Street are ramping up consumer lending operations. For the first time, even Goldman Sachs is getting into the game. More banks are expected to ramp up activity in the lending arena.

NOW WATCH: Forget the Apple Watch — here’s the new watch everyone on Wall Street wants