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Housing Recovery Due To Help From Economy
Hancock Mortgage Partners, LLC
A housing market recovery may finally be imminent. Mortgage News Daily recently reported that experts from the National Association of Home Builders cited a recovering economy, low mortgage rates, pent-up demand and affordable home prices all conspiring to lift the housing market. In fact, March pending home sales were up 3.4% over February, which was higher than the 1% predicted by analysts.
Signs of Life
Needless to say, a better housing market requires a better overall economy. The good news is that payroll employment has been growing in recent months while the unemployment rate has been receding. Consumer confidence is now back to pre-recession levels; major purchases like cars and home furnishings have been rising as well, indicating consumer willingness to start buying big ticket items again. It stands to reason that home sales will be the next to start rising.
Maury Harris, chief U.S. economist and managing director at UBS concurs that the U.S. economy is getting better and says banks are “awash in cash,” with more than $2 trillion in excess reserves. He believes banks will put the cash to work by increasing lending, which will in turn help the economy even more.
A Solid Foundation for Growth
Obstacles to the housing market recovery could be tighter consumer credit, construction labor shortages and higher building material pricing. An increase in credit demand could move mortgage rates up, but they’ll still be low by historic standards and not a major deterrent to a recovering housing market.
Some economists are predicting that new home sales could climb 29% in 2014, with single-family homes increasing 22% in 2014 and another 55% in 2015, Mortgage News Daily reports. Those considering buying or selling a home soon should keep an eye on these trends.