Builders hope­ful re­cov­ery will last

Econ­omy

Austin American-Statesman - - BUSINESS - Con­tin­ued from B Ad­di­tional ma­te­rial from Bloomberg News.

Home val­ues are ris­ing in more states and cities, ac­cord­ing to the report. Prices in­creased in 45 states in Oc­to­ber, up from 43 the pre­vi­ous month. The big­gest in­creases were in Ari­zona, where prices rose 21.3 per­cent, and in Hawaii, where they were up 13.2 per­cent.

The five states where prices de­clined were: Illi­nois, Delaware, Rhode Is­land, New Jersey and Alabama.

In 100 large metro ar­eas, only 17 re­ported price de­clines. That’s an im­prove­ment Septem­ber, when 21 re­ported de­clines.

Mort­gage rates are near record lows, while rents in many cities are ris­ing. That makes home buy­ing more af­ford­able, push­ing up de­mand.

And more peo­ple are look­ing to buy or rent a home af­ter liv­ing with rel­a­tives or friends dur­ing and im­me­di­ately af­ter the re­ces­sion.

At the same time, the num­ber of avail­able homes is at the low­est level in 10 years, ac­cord­ing to the Na­tional As­so­ci­a­tion of Real­tors. The com­bi­na­tion of low in­ven­tory and ris­ing de­mand pushes up prices.

Last week, an in­dex mea­sur­ing the num­ber of Amer­i­cans who signed con­tracts to buy homes in Oc­to­ber jumped to the high­est level in al­most six years. That sug­gests sales of pre­vi­ously oc­cu­pied homes will rise in the coming months.

Builders, mean­while, are more op­ti­mistic that the re­cov­ery will en­dure. A mea­sure of their con­fi­dence rose to the high­est level in six and a half years last month. And builders broke ground on new homes and apart­ments at the fastest pace in more than four years in Oc­to­ber.

Also, new-home sales rip­ple through the econ­omy as buy­ers spend an av­er­age of $8,000 on house­hold items, in­clud­ing fur­ni­ture, ap­pli­ances and land­scap­ing, ac­cord­ing to David Crowe, chief econ­o­mist for the Washington-based Na­tional As­so­ci­a­tion of Home Builders.

That’s ben­e­fit­ing com­pa­nies like At­lantabased Home De­pot Inc., the largest U.S. home­im­prove­ment re­tailer, and Lowe’s Cos., the sec­ond-big­gest, which both re­ported higher third-quar­ter profit as sales rose. Shares of Home De­pot have climbed 53 per­cent this year, while North Carolina-based Lowe’s is up 40 per­cent.

Even those who aren’t mov­ing are spend­ing more on fur­nish­ing and re­mod­el­ing, ac­cord­ing to Robert Ni­block, chief ex­ec­u­tive of­fi­cer of Lowe’s.

“The bot­tom­ing of home val­ues gives that home­owner psy­cho­log­i­cal per­mis­sion to spend on their homes again,” Ni­block said.

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