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Wednesday, February 27, 2013
Housing market signals its recovery is going strong
Two pieces of data released Tuesday show that the recovery in real estate continues to be a bright spot in the still somewhat sluggish economic rebound.
New-home sales leaped in January versus the previous month to the highest level in 4-1/2 years, government data showed, as steady job creation and record-low interest rates spurred buying.
In the meantime, single-family home prices picked up in December, closing out 2012 with the biggest yearly gain in more than six years, a closely watched survey showed on Tuesday.
The S&P/Case Shiller composite index of 20 metropolitan areas rose 0.9 percent in December on a seasonally adjusted basis, topping expectations for a gain of 0.5 percent.
On a non-adjusted basis, prices were up 0.2 percent.
"Home prices ended 2012 with solid gains," David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.
"Housing and residential construction (led) the economy in the 2012 fourth quarter."
Prices in the 20 cities jumped 6.8 percent year-over-year, ahead of expectations for 6.6 percent and the best yearly gain since July 2006.
For the final quarter of the year, prices gained 2 percent on a seasonally adjusted basis.
The Commerce Department said Tuesday that new-home sales rose nearly 16 percent in January to a seasonally adjusted annual rate of 437,000. The percentage increase was the largest in nearly 20 years. And December's sales were revised higher to 378,000 from 369,000.
The number of previously occupied homes for sale is at a 13-year low. That shortage creates more demand for new homes. Builders began construction on the most homes in four years last year.
Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the National Association of Homebuilders
The increase in home building has helped boost construction hiring. The industry has gained 98,000 jobs since September, the best stretch since the spring of 2006.
Still, the increases in new-home sales are coming from depressed levels. Sales plummeted to a record low in 2011. And sales are still well below the 700,000 annual level that economists consider healthy.
Original Article
Ken Keegan
Real Estate Broker
Wednesday, February 20, 2013
Housing to drive economic growth (finally!)
From CNN:
The bursting of the housing bubble plunged the economy into a recession from which it has yet to fully recover. But economists say this could finally be the year that housing lifts us out of the doldrums.
Just over half of economists surveyed by CNNMoney identified a housing recovery as the primary driver of economic growth this year. The rest were split fairly evenly between consumer spending, increased domestic energy production and stimulus from the Federal Reserve as major growth drivers.
"Homebuilding activity will likely remain the strongest growing component of the economy in 2013," said Keith Hembre, chief economist of Nuveen Asset Management. "After several years of excess supply, demand and supply conditions are now in much better balance."
Home sales rebounded to the strongest level in five years in 2012, as home building bounced back to levels not seen since early in the recession. Near record low mortgage rates, rising home prices and a drop in foreclosures have combined to bring buyers back to the market.
The economists surveyed also forecast that there will be just under 1 million housing starts this year -- roughly matching the 28% rise in home building in 2012. Moody's Analytics is forecasting much stronger growth -- a 50% rise both this year and next year, which it estimates will create more than 1 million new jobs.
"There's a lot of pent-up demand for housing, and very little supply," said Celia Chen, housing economist for Moody's Analytics. "As demand continues to improve, home builders have nothing to sell. They'll have to build." She said that growth in building will mean adding not just construction jobs, but also manufacturing jobs building the appliances and furniture needed in the new homes, which in turn drives overall consumption higher.
And economists say the tight supply and renewed demand for housing should lead to higher home values -- about a 3.7% increase according to the survey.
"One of the most significant indirect effects from the housing recovery is the 'wealth effect' on consumers due to the recovery in home prices," said Joseph LaVorgna, chief U.S. economist of Deutsche Bank, who said better home values can affect both consumer psychology on spending as well as their actual finances.
"Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets," he said.
Ken Keegan
Real Estate Broker
(910) 523-0903 mobile
Click here for more information on Brunswick, County Real Estate
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