This month’s autumn equinox may usher in darker days, but the housing sector continues to shine brightly.
July Housing Starts, marked by when excavation begins, exceeded expectations, coming in at an annual rate of 1.206 million. This is a 10 percent increase from July 2014. Single-family housing starts led the increase—unlike June’s numbers, which were led by multifamily rental units.
Existing Home Sales surged in July, reaching their highest levels since 2007. Sales of new homes rebounded in July after a decline in June, and were up nearly 29 percent from July 2014.
Research firm CoreLogic reported that home prices rose 6.5 percent in June, marking the 40th consecutive month of year-over-year gains. CoreLogic cited pent-up demand, affordability and a more robust labor market for the gains. Home prices continue to appreciate at what is considered normal levels, after double digit gains seen in 2014.
Economy “Springing” to Life
Gross Domestic Product (GDP) improved in the second quarter, rising by 3.7 percent, which was well above the 0.6 percent recorded in the first quarter. GDP is the broadest measure of economic activity, so this is a good sign our economy is headed in the right direction.
Will the Fed Act This Season?
The benchmark Fed Funds Rate (the short-term interest rate at which banks lend money to other banks overnight) made it through the heat of summer unchanged. So why is this rate important to homebuyers and homeowners?
The Fed Funds Rate has been called “the most potent tool” for regulating the U.S. economy. When the economy needs a boost, the rate is lowered. When inflation is too high, the rate increases. These shifts have a direct impact on spending, employment and other rates—including home loan rates.
Analysts disagree about whether the Fed will raise the Fed Funds Rate at its meetings in September, October or December of this year, or wait until next year. One thing is certain: the Fed will be watching all sectors of the economy as it evaluates this important decision.
The Bottom Line
For now, home loan rates remain attractive. If you have any questions about the housing market and home loans, please don’t hesitate to contact me. Enjoy this month’s issue of YOU Magazine.
This article was taken from my September 2015 issue of YOU Magazine. Click here to view the full newsletter.