The latest snapshot of Gross Domestic Product (GDP), which is the broadest measure of U.S. economic activity, shows economic growth is still sluggish overall. For all of 2014 GDP was only 2.42 percent, which is disappointing considering this is the sixth year of the economic recovery.
However, the housing sector continues to be a bright spot, despite being hampered by the harsh winter weather early this year. Despite a big 17 percent decline in Housing Starts in February, Building Permits, which are a sign of future construction, were up 3 percent. This figure is a good sign that the setback in Housing Starts was temporary due to the weather. Another good sign for the housing sector: New Home Sales hit a seven-year high in February (more on New Home Sales below).
Freddie Mac also recently noted in its March 2015 U.S. Economic and Housing Market Outlook that it expects 2015 to be the best year for home sales and new construction since 2007. Freddie Mac cited an improving job market, rising rents and expanded credit availability as some reasons for its positive outlook.
Also of note, home prices are continuing to show signs of growth, as the S&P/Case-Shiller Home Price Index rose by 4.6 percent from January 2014 to January 2015. This is the biggest gain since September and up from the 4.4 percent annual rate recorded in December. The lofty price gains seen in 2013 and early 2014 may have cooled, but home price gains continue to be steady at what is considered normal levels.
The bottom line is home loan rates continue to remain very attractive, making now a great time to consider a home purchase or refinance. Please let me know if you have any questions!