Builders hopeful recovery will last
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.