Housing influences every other economic sector, not just because jobs are created to get houses built, but also because consumers spend lots of money–lots of other places–when they buy a new home. Add to this the tremendous transfer of wealth and additional taxation that occurs when homes are selling, and you’ve got the makings of a robust economy.
Here’s a glance at how the housing sector is doing now…and how it’s affecting the outlook for our economic recovery today.
New Construction and Housing Starts Improve Recent housing data are reflecting improvement. Housing Starts jumped 15% from August to September and were at their highest level since July 2008. Building Permits also showed similar strength. States like Washington, Iowa, Nebraska, Texas and South Carolina are all experiencing new construction growth. In addition, the National Association of Home Builder’s Home Builder Sentiment index–which is important since it reflects how builders feel–rose for the sixth consecutive month in October, its highest level since June 2006.
New and Existing Home Sales on the Rise September’s Existing Home Sales were 11% higher than the same period last year, translating to 15 straight months of increases on an annual basis. In addition, September’s New Home Sales were up 8% from June of this year. The increase in new home sales is a good sign for the housing market and our economy overall, as it indicates potential consumer purchases of furniture and appliances.
“Shadow Inventory” Declining Shadow Inventory is the term for the mass of properties in some phase of foreclosure, but not yet on the market. Banks withhold properties because the dramatic volume of foreclosures in recent years has been hard to keep up with. Shadow Inventory is a problem because it can keep homebuilding from taking place, depress existing home prices, and continue to keep prices stubbornly weak.
Good news came in September when RealtyTrac, a leading real estate website specializing in foreclosure analysis, revealed a 7% decrease in foreclosure filings (which include default notices, scheduled auctions, and bank repossessions), down from August. They also reported filings were 16% lower than September 2011 and the lowest level since 2007. And that’s not all. CoreLogic, a leading provider of financial, consumer and property information, reported about 1.3 million homes (3.2% of all homes with a mortgage) were in the national foreclosure inventory as of August 2012, compared to 1.4 million in August 2011. They also found 32 of the 50 states have seen their percentage of foreclosure inventory decrease compared to last year.
Some states are headed in the opposite direction. At the top of list with the highest foreclosure inventory are Florida (11%), New Jersey (6.5%), New York (5.2%) and Illinois (4.8%).
The Bottom… and the Bottom Line In its policy statement released on October 24 after the Federal Open Market Committee Meeting, the Fed noted that “economic activity has continued to expand at a moderate pace in recent months” and that “the housing sector has shown some further signs of improvement, albeit from a depressed level.” While this is good news, it’s important to note that our recovery in both the housing market and our economy overall is likely to be slow-going.
The bottom line is that home loan rates remain near historic lows, making now a great time to purchase or refinance a home. If you have any questions about your personal situation, or if you’re wondering how you can take advantage of today’s market, please contact me.
This article was taken from my November 2012 issue of YOU Magazine. Click here to view the full newsletter.
Good info, especially for this girl trying to sell her house. Thanks. Kristen M. Kelly | Coach | Building Champions | 303.941.5185 T | http://www.buildingchampions.com
Carla Grabarek | Coach Assistant | Building Champions |503.670.1013 T | 503.906.2174 F |
For reflections on life, visit my blog: http://www.CoachKristenKelly.com
This is a difficult time. Employment will always be the key factor. It’s never an easy job to ask folks to feel good about giving up or cutting their job. (Government workers) The public sector has to be the biggest source of employment. Real people, earning real dollars… and the government can’t punish them with taxes.