Are Home Sales Nearing Recent Highs?
According to economists via Bloomberg, housing sales are rising to their highest levels in three years. A survey of economists by Bloomberg shows that housing sales have seen the fastest increase since November 2009.
The sharp increase in housing sales is really due to buyers who were waiting due to the recession and slow recovery says NPR. Now though, after living with relatives or renting, they feel ready to purchase their own homes.
Sales of pre-owned homes increased from 5.08 million in June to 5.15 million in July. New and pre-owned home sales combined reached a 5.64 million annualized rate in July. This could be a sign of a stronger economy.
Builders are feeling more confident due to the increase in sales even though borrowing costs are rising as well. Chief Executive Officer Larry Mizel of the builder MDC Holdings (NYSE:MDC) said that “We believe that the impact of rising rates can be offset by the benefits of an improving economy, especially improvements in consumer confidence that stems from growth in employment and income levels.”
Not only is the housing market doing better but so is the auto market. What does this mean? Bloomberg says that this coupled with cuts in federal spending should improve economic growth for the rest of the year.
Even though some builders are confident about the future, some still have concerns. Bloomberg notes that the Russell 3000 Homebuilding Index has fallen 21 percent over the summer due to concerns about the rising 10-year Treasury while the S&P has risen slightly. We will have to see how the housing market continues to fare.