Recovery Shows Signs of Strength
Economists tend to agree that the nation can not truly emerge from the current doldrums without housing being part of the process. Lately, signs have appeared that a recovery in housing is underway. Census Bureau figures show that housing starts and permits rose in August. Sales of previously occupied homes also rose. There was a 7.8% increase in these over the same period last year according to data obtained from the National Board of Realtors.
One of the strongest areas of growth occurred in the number of new homes begun. In August the rate rose to a level that would result in 750,000 units over the course of a full year. This represented a whopping 29.1% gain over such figures from August of 2011.
Home builders are increasingly bullish about future trends. The National Association of Home Builders reports that its confidence index has just reached its highest level since June of 2006.
Despite these strong numbers, the number of housing starts is still well below the peak level reached in May of 2005. The pace then called for construction of two million homes on an annualized basis.
Housing Recovery Would Alleviate Other Problems
A housing recovery would also have a beneficial impact on the job situation. New home construction means more employment in construction. Estimates reach a total of 3 jobs per house per year. Such jobs are generally well paid. There are also many jobs involved in the selling of homes. In addition to the spur to employment in financial firms making the mortgage, and the realtors overseeing the transactions, there are a host of people in advertising, insuring, inspecting, and title searches that will likely see gains in employment.
The good news in jobs does not stop there. When people purchase a new home, they tend to purchase many items to go with it. One of the places seeing the fastest recovery is Miami real estate. These would include things such as furniture, drapes and carpets. Not only will the stores that supply these see gains in business, but the firms that manufacture such goods will have to add people to fill the orders.
Low Interest Rates Help Sales
The low interest rates currently available for mortgages have helped make housing more affordable. Record low rates may be even going lower. The Federal Reserve has recently announced that it will purchase tens of billions of dollars a month in long term mortgage securities. The program will be open ended meaning there is no set date for stopping such purchases. The fed has announced its intention to continue making such buys until the unemployment rate falls to an acceptable level currently seen as around 5.5%. Such a drop is not expected to be reached until the end of 2014.
The fed’s action is expected to lead to an increase in the volume of lending. It will give financial firms the confidence that well crafted mortgages will be able to find a ready buyer for their product.
Taken in aggregate, these are all signs that the housing recovery is here to stay.