Housing is suddenly a bright spot for economy
(Read article summary)In the midst of the economy's slowdown, housing is gradually picking up. Home prices and new construction are up. Existing home sales, while down, are expected to rebound.
Suddenly, the US housing market is a bright spot for the economy – mostly by default.
While growth prospects for much of the rest of the economy are dimming, the housing market is looking brighter. New residential construction is at its highest level in nearly four years. Home prices are rising. And sales of existing homes – which fell last month, according to a new report – are still trending higher year over year, despite weakening growth in the rest of the economy.
“The fundamentals of housing are really poised for strong growth once demand picks up,” says Celia Chen, housing economist at Moody's Analytics, an economic research subsidiary of Moody’s Corp. and based in West Chester, Pa. The housing recovery “is sustainable as long as the economy continues to add jobs.”
Housing still faces a long, hard slog. Existing home sales, for example, slowed 5.4 percent in June from an upwardly revised May figure, the National Association of Realtors (NAR) reported Thursday. But in comparison with everything else – a slowdown in job growth, weakness in manufacturing, and concerns over the European debt crisis and China’s slowdown – the housing market looks relatively strong.
Housing “is the bright spot right now,” says Patrick Newport, an economist with IHS Global Insight in Lexington, Mass.
