Hous­ing re­cov­ery ap­pears to be back on track

The Times Herald (Norristown, PA) - - LOCAL - By CHRISTO­PHER S. RU­GABER

WASH­ING­TON — A fourth straight monthly in­crease in sales of ex­ist­ing homes pro­vided the lat­est ev­i­dence Thurs­day that the U.S. hous­ing mar­ket is re­bound­ing from a weak start to the year.

Hous­ing has been a drag on an oth­er­wise strength­en­ing econ­omy, in part be­cause a harsh win­ter de­layed many sales. But Americans are step­ping up pur­chases as more homes have been put up for sale. And low mort­gage rates and mod­er­at­ing price gains have made homes more af­ford­able.

“The mo­men­tum is in the right di­rec­tion,” said An­drew La­belle, an economist at TD Bank who noted that the past four months have marked the fastest four-month sales gain since 2011. “Sus­tained jobs gains, as well as the fall in mort­gage rates since the be­gin­ning of the year, ap­pear to have un­leashed at least some pent-up de­mand.”

Sales of ex­ist­ing homes rose 2.4 per­cent in July to a sea­son­ally ad­justed an­nual rate of 5.15 mil­lion, the Na­tional As­so­ci­a­tion of Real­tors said Thurs­day. That was the high­est an­nual rate since Septem­ber of last year.

The in­crease fol­lows other en­cour­ag­ing signs that the hous­ing mar­ket is im­prov­ing. The pace of home con­struc­tion starts surged 15.7 per­cent in July to a sea­son­ally ad­justed an­nual rate of 1.1 mil­lion homes, the gov­ern­ment said this week. Ap­pli­ca­tions for build­ing per­mits, a gauge of fu­ture ac­tiv­ity, also strength­ened last month.

And a survey of home­builders re­leased Mon­day showed that they were more con­fi­dent about fu­ture sales.

The en­cour­ag­ing read­ings con­trast with re­ports ear­lier this year, when weak sales and limited build­ing led econ­o­mists to char­ac­ter­ize hous­ing as a fal­ter­ing piece of the eco­nomic re­cov­ery. Fed­eral Re­serve Chair Janet Yellen and Vice Chair­man Stan­ley Fis­cher had pointed to hous­ing as an eco­nomic weak spot.

Econ­o­mists noted that hous­ing still hasn’t fully re­cov­ered from its slow­down ear­lier this year. The an­nual sales pace re­mains 4.3 per­cent be­low last July’s rate. And con­struc­tion has merely re­turned to its pace in Oc­to­ber; it has yet to ex­ceed it.

Yet econ­o­mists say they’re en­cour­aged by signs that the lat­est sales gains are sus­tain­able.

Stephanie Karol, an economist at IHS Global In­sight, said a “vir­tu­ous cy­cle” is emerg­ing: More home­own­ers are list­ing their prop­er­ties for sale. A greater sup­ply of homes then en­cour­ages more po­ten­tial buy­ers to take the plunge. And that, in turn, helps sus­tain mod­est price gains, which lead more peo­ple to sell.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.