America
Housing Roars Back
Homes are selling at their fastest pace since before the recession — but some economists predict trouble ahead.
T BY NICK SANCHEZ
he u.s. housing sector appears poised to take off this year, and analysts hope a rebound could touch off a
“multiplier eff ect” that will yank the U.S. economy out of its doldrums. Among the signs the housing mar-
ket is fi nally recovering: The available inventory of U.S. homes dropped to just 1.82 million homes in December — an 11-year low. At the current sales pace, the inventory of homes now stands at 4.4 months. That compares to 4.8 months in November. The National Association of
Home Builders (NAHB) predicts a 35 percent jump in single-family housing starts this year. Builders are already dusting off blueprints they fi led away when the bubble popped. Because housing starts
agement, told CNBC’s Squawk Box. “When you think about the spillover eff ect in construction jobs, furniture, autos, cement — everything that comes with household formation and new home purchases.” So just as the housing slump led
America into the Great Recession, economists hope that a 2013 rebound could lead the U.S. economy back out. In the wake of the massive foreclo-
sure crisis that erupted in 2007 and 2008, what’s sparked the resurgence? Experts cite two factors. First, banks have worked diligently
to help homeowners restructure mort- gages, even reducing principal owed to them. And banks have been careful to not fl ood the mar- ket with foreclosed homes, propping up demand for new homes.
Second, the Fed-
eral Reserve has taken the unprecedented action of buying $85 billion a month of Treasury notes and mortgage-backed bonds. Not surprisingly, long-term rates
have fallen to historic lows — allowing millions of homeowners to refi nance their current rates and new buyers to purchase a home. The fl y in the ointment is
Other Industries Benefit from
Home Construction Growth
bolster a host of related industries, ranging from raw materials to applianc- es, the economic benefi ts of a robust housing sector are far-reaching. “That’s really a big deal for the
U.S. economy,” William A. Muggia, the CEO of Westfi eld Capital Man-
20 NEWSMAX | MARCH 2013
• Building Trades • Raw Materials • Landscaping • Job Growth • Transportation • Retailers • Financial Institutions • Local Economy
the belief by some econo- mists that interest rates will soon rise. And the Fed has hinted it will slow bond purchasing — known as quantitative easing — sometime in mid-2013. Harvard economist
Martin Feldstein predicts that when that happens, the economy could face serious headwinds. “If we take long-term
bond rates to anything like a normal number, that means higher bond interest rates, higher mortgage inter-
est rates, pressure on the stock market, and pressure on house prices,” he told CNBC in January. Still, several analysts predict 2013
will be the best homebuilding year since the 2007 housing implosion. The signs of new home-construction growth are everywhere.
Cincinnati.com, for example,
reports Ohio homebuilders “are gear- ing up for a big year.” Home construction booms are
under way in Austin and Houston, and in Raleigh, N.C. The National Association of Real-
tors reported the median resale price of a home was $180,800 in December — 11.5 percent higher than in Decem- ber 2011. The average markdown on a home
price in late 2009 was 24 percent. Sellers only had to shave 7.7 percent off their asking price on average to close the sale by December 2012,
Zillow.com reports.
NORTH CAROLINA
FLORIDA
CONSTRUCTION, FLORIDA, VIRGINIA/AP IMAGES / NORTH CAROLINA/JIM R. BOUNDS/BLOOMBERG VIA GETTY IMAGES
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