The U.S. housing market is rebounding faster than expected. The question is, can it last? Home resales in July posted the largest monthly increase in at least 10 years as first-time buyers rushed to take advantage of a tax credit that expires Nov. 30. Sales jumped 7.2 percent and beat expectations, the National Association of Realtors said Friday.
"We've got tens of thousands of homes perfect for the first-time homebuyer and we've taken advantage of that," said George Hackett, president of Coldwell Banker Real Estate in Pittsburgh.
Sales hit a seasonally adjusted annual rate of 5.24 million in July, from a pace of 4.89 million in June. It was the fourth-straight monthly increase and the strongest month since August 2007. Sales had been expected to rise to an annual pace of 5 million, according to economists surveyed by Thomson Reuters.
The risks to that healthy pace, however, are job cuts, mortgage rates and the looming end to the homebuyer tax credit. And the last one could be a doozy because first-time buyers are snapping up one out of every three homes.
First-time buyers get a credit of 10 percent of the purchase price of a home, up to $8,000. The credit phases out for singles earning more than $75,000 and couples earning more than $150,000. The real estate industry is lobbying to have the credit extended but its unclear if Congress will be swayed.
"I would not be at all surprised to see a dip at the end of the year once the tax credit expires," said Robert Dye, senior economist with PNC Financial Services Group.
The home sales report was another sign that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.
Economic activity in both the U.S. and around the world appears to be leveling out and "the prospects for a return to growth in the near term appear good," Federal Reserve Chairman Ben Bernanke said Friday.
But fallout from the recession will linger for some time. Unemployment rose in July in 26 states and fell in 17, the Labor Department said Friday. That is driving up foreclosures, which are not expected to level off until sometime next year.
Sales of foreclosures and other distressed properties made up about a third of all transactions last month, down from nearly half earlier this year. In places like San Diego and Orlando, buyers are snapping up foreclosed properties at deep discounts, and inventories are low.
Those sales helped drag down the national median sales price by 15 percent to $178,400.
Stephen Stoyko hunted off-and-on for two years before he bought a four-bedroom, two-story foreclosure this week for $320,000. The home in Roswell, Ga., north of Atlanta, was initially priced at $335,000.
Stoyko expects to spend about $7,000 to replace missing kitchen appliances and light fixtures _ a cost will be at least partially offset by the first-time homebuyer tax credit. "It's bigger than I needed, but the price was right," he said.
The inventory of unsold homes on the market rose to 4.1 million, from 3.8 million a month earlier as buyers who had held their homes off the market in the past decided to list them for sale. That's a 9.4-month supply at the current sales pace, unchanged from June.
Source: Road Runner Online
To view the article, click here.
Friday, August 21, 2009
Wednesday, August 12, 2009
The National Economy Stabilizes...
After a difficult period, the economy shows signs of stability and the housing market looks promising!
Click here for this article.
Source: New York Times
Click here for this article.
Source: New York Times
Tuesday, August 4, 2009
Pending Home Sales Rise - Great News for Housing Market!
Pending U.S. home sales rose in June for the fifth straight month, another encouraging sign of life for the embattled U.S. housing market, the National Association of Realtors reported Tuesday.
For June, the Realtors group said its pending home sales index rose 3.6 percent to 94.6, from an upwardly revised reading of 91.3 in May. The last time there were five consecutive monthly gains was July 2003.
The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2. The report tracks signed contracts to purchase previously owned homes and is considered a barometer for future home sales. Typically there is a one- to two- month lag between a sales contract and a completed deal.
The jump in pending home sales coincides with other positive trends in the residential real estate market.
"The housing market is healing and the patient is getting healthier at an accelerating pace," said economist Joel L. Naroff, president of Naroff Economic Advisors Inc.
For the first time in five years, home resales have risen for three months in a row, increasing almost 4 percent in June. Low prices, attractive mortgage rates and a first-time homebuyers tax credit of up to $8,000 have kick-started sales.
"Because housing is so affordable in today's market, job security and the first-time buyer tax credit are bigger factors in influencing home sales," said Lawrence Yun, the Realtors group's chief economist, in a statement.
Also Tuesday, homebuilder D.R. Horton Inc. said its fiscal third-quarter losses shrank from the year-ago period, as it took smaller charges against the falling values of its land and unsold homes.
D.R. Horton's results followed similar numbers from Pulte Homes Inc. and Centex Corp., which reported quarterly earnings Monday that showed new-home orders picked up during the first half of the year.
Yun said he expects existing home sales to gradually rise over the balance of the year, with conditions varying around the country.
"It appears home sales are on a sounder footing and inventory is gradually being absorbed," he said. Regionally, the pending home sales index jumped 7.1 percent to 100.7 in the South and 2.9 percent to 100.4 in the West. The index inched up 0.4 percent to 81.2 in the Northeast, and up 0.8 percent to 89.9 in the Midwest.
Source: Associated Press
For June, the Realtors group said its pending home sales index rose 3.6 percent to 94.6, from an upwardly revised reading of 91.3 in May. The last time there were five consecutive monthly gains was July 2003.
The results were far better than analysts expected. Economists surveyed by Thomson Reuters expected the index to come in at 91.2. The report tracks signed contracts to purchase previously owned homes and is considered a barometer for future home sales. Typically there is a one- to two- month lag between a sales contract and a completed deal.
The jump in pending home sales coincides with other positive trends in the residential real estate market.
"The housing market is healing and the patient is getting healthier at an accelerating pace," said economist Joel L. Naroff, president of Naroff Economic Advisors Inc.
For the first time in five years, home resales have risen for three months in a row, increasing almost 4 percent in June. Low prices, attractive mortgage rates and a first-time homebuyers tax credit of up to $8,000 have kick-started sales.
"Because housing is so affordable in today's market, job security and the first-time buyer tax credit are bigger factors in influencing home sales," said Lawrence Yun, the Realtors group's chief economist, in a statement.
Also Tuesday, homebuilder D.R. Horton Inc. said its fiscal third-quarter losses shrank from the year-ago period, as it took smaller charges against the falling values of its land and unsold homes.
D.R. Horton's results followed similar numbers from Pulte Homes Inc. and Centex Corp., which reported quarterly earnings Monday that showed new-home orders picked up during the first half of the year.
Yun said he expects existing home sales to gradually rise over the balance of the year, with conditions varying around the country.
"It appears home sales are on a sounder footing and inventory is gradually being absorbed," he said. Regionally, the pending home sales index jumped 7.1 percent to 100.7 in the South and 2.9 percent to 100.4 in the West. The index inched up 0.4 percent to 81.2 in the Northeast, and up 0.8 percent to 89.9 in the Midwest.
Source: Associated Press
Sunday, August 2, 2009
Economic Growth Surprisingly Increasing in 2009
At long last, the worst recession in America since World War II appears on the verge of ending.
The economy dipped only slightly in the second quarter of this year -- falling at a 1 percent annual pace, better than expected. And many analysts think the economy is starting to grow again in the current quarter, setting up a long-awaited recovery.
Still, any rebound is likely to be restrained by consumers' reluctance to spend. Stressed by rising unemployment, smaller paychecks and shrunken nest eggs, Americans spent less in the second quarter. Without the full strength of consumer spending, which supplies more than two-thirds of U.S. economic activity, businesses would need to deliver more of the firepower for sustained growth.
Economists say they are hopeful that consumers, aided by the "cash for clunkers" program to boost car sales, eventually will nudge up spending. Over time, that would help stem a still-heavy wave of job losses and stimulate hiring.
"We won't have a recovery as long as we keep losing jobs," President Barack Obama acknowledged Friday.
He added: "Eventually, businesses will start growing again and will start hiring again, and that's when it will truly feel like a recovery to the American people."
The small drop in gross domestic product for the April-to-June period, reported Friday by the Commerce Department, followed a dizzying free fall in the first three months of this year. The economy plunged at an annual rate of 6.4 percent in the first quarter, the worst in nearly three decades.
Including the April-to-June period, the economy has now contracted for a record four straight quarters, for the first time on record dating to 1947. Over that period, companies and ordinary Americans have suffered a painful toll, with job losses still exceeding a net total of 400,000 each month.
Many economists had predicted a slightly worse 1.5 percent annualized contraction in second-quarter GDP, which is considered the best gauge of U.S. economic health. GDP measures the value of all goods and services -- everything from cars, clothes and computers to makeup, manicures and machinery -- produced in the United States.
"The recession seems to be largely over with at this point," said economist Joel Naroff, president of Naroff Economic Advisors. "We still have a long way to go to get back to full health."
Behind the better second-quarter performance were other signs of a fading recession: less drastic spending cuts by businesses, a resumption of federal and local government spending and an improved trade picture.
Businesses did end up cutting their stockpiles of goods at a record pace in the second quarter, but that carries a silver lining. With their inventories at rock-bottom, businesses will likely need to ramp up production to meet customer demand. That would stimulate the economy starting in the current quarter. Some economists think growth in the July-to-September quarter could be more vigorous than previously forecast -- possibly 3 percent annual growth or higher.
Obama's stimulus package of tax cuts and increased government spending provided some support to the economy in the second quarter. But it will have more impact in the second half of this year as it extends its reach, economists said.
In the meantime, the damage caused by this recession runs deep.
The figures released Friday provide the most compelling evidence to date that the current recession has been the worst since the Great Depression. It has taken a 3.9 percent bite out of economic activity so far, said Mark Zandi, chief economist at Moody's Economy.com. Before this downturn, the most painful hit came in the 1957-58 recession, when GDP fell 3.8 percent, he said.
And in revisions to GDP figures that stretch back to the Great Depression, the Commerce Department now estimates the economy grew just 0.4 percent in 2008. That's much weaker than the 1.1 percent growth the government had earlier estimated.
Even if the recession ends later this year, the job market will remain weak. Companies are expected to keep cutting payroll through the rest of this year. The Fed says unemployment -- now at a 26-year high of 9.5 percent -- will top 10 percent at the end of this year. Businesses won't likely boost hiring until they're certain the recovery has staying power.
In the second quarter, businesses -- including home builders -- continued to cut spending, though not nearly as much as they had earlier. That's one reason the economy didn't contract as much as feared.
Consumers retreated en masse. They sliced spending at a rate of 1.2 percent in the second quarter, after having nudged up purchases at a 0.6 percent pace in the first quarter. In large part, that's because wages and salaries have fallen for the past three quarters.
With people spending less, Americans' savings rate rose sharply -- to 5.2 percent in the second quarter, the highest since 1998. As important as savings is, many economists wish that consumers would save less and spend more right now to help propel the recovery.
"I'm praying, 'God, please don't encourage American households to save a lot more just yet,'" said Nariman Behravesh, chief economist at IHS Global Insight.
Source: Yahoo! Finance
The economy dipped only slightly in the second quarter of this year -- falling at a 1 percent annual pace, better than expected. And many analysts think the economy is starting to grow again in the current quarter, setting up a long-awaited recovery.
Still, any rebound is likely to be restrained by consumers' reluctance to spend. Stressed by rising unemployment, smaller paychecks and shrunken nest eggs, Americans spent less in the second quarter. Without the full strength of consumer spending, which supplies more than two-thirds of U.S. economic activity, businesses would need to deliver more of the firepower for sustained growth.
Economists say they are hopeful that consumers, aided by the "cash for clunkers" program to boost car sales, eventually will nudge up spending. Over time, that would help stem a still-heavy wave of job losses and stimulate hiring.
"We won't have a recovery as long as we keep losing jobs," President Barack Obama acknowledged Friday.
He added: "Eventually, businesses will start growing again and will start hiring again, and that's when it will truly feel like a recovery to the American people."
The small drop in gross domestic product for the April-to-June period, reported Friday by the Commerce Department, followed a dizzying free fall in the first three months of this year. The economy plunged at an annual rate of 6.4 percent in the first quarter, the worst in nearly three decades.
Including the April-to-June period, the economy has now contracted for a record four straight quarters, for the first time on record dating to 1947. Over that period, companies and ordinary Americans have suffered a painful toll, with job losses still exceeding a net total of 400,000 each month.
Many economists had predicted a slightly worse 1.5 percent annualized contraction in second-quarter GDP, which is considered the best gauge of U.S. economic health. GDP measures the value of all goods and services -- everything from cars, clothes and computers to makeup, manicures and machinery -- produced in the United States.
"The recession seems to be largely over with at this point," said economist Joel Naroff, president of Naroff Economic Advisors. "We still have a long way to go to get back to full health."
Behind the better second-quarter performance were other signs of a fading recession: less drastic spending cuts by businesses, a resumption of federal and local government spending and an improved trade picture.
Businesses did end up cutting their stockpiles of goods at a record pace in the second quarter, but that carries a silver lining. With their inventories at rock-bottom, businesses will likely need to ramp up production to meet customer demand. That would stimulate the economy starting in the current quarter. Some economists think growth in the July-to-September quarter could be more vigorous than previously forecast -- possibly 3 percent annual growth or higher.
Obama's stimulus package of tax cuts and increased government spending provided some support to the economy in the second quarter. But it will have more impact in the second half of this year as it extends its reach, economists said.
In the meantime, the damage caused by this recession runs deep.
The figures released Friday provide the most compelling evidence to date that the current recession has been the worst since the Great Depression. It has taken a 3.9 percent bite out of economic activity so far, said Mark Zandi, chief economist at Moody's Economy.com. Before this downturn, the most painful hit came in the 1957-58 recession, when GDP fell 3.8 percent, he said.
And in revisions to GDP figures that stretch back to the Great Depression, the Commerce Department now estimates the economy grew just 0.4 percent in 2008. That's much weaker than the 1.1 percent growth the government had earlier estimated.
Even if the recession ends later this year, the job market will remain weak. Companies are expected to keep cutting payroll through the rest of this year. The Fed says unemployment -- now at a 26-year high of 9.5 percent -- will top 10 percent at the end of this year. Businesses won't likely boost hiring until they're certain the recovery has staying power.
In the second quarter, businesses -- including home builders -- continued to cut spending, though not nearly as much as they had earlier. That's one reason the economy didn't contract as much as feared.
Consumers retreated en masse. They sliced spending at a rate of 1.2 percent in the second quarter, after having nudged up purchases at a 0.6 percent pace in the first quarter. In large part, that's because wages and salaries have fallen for the past three quarters.
With people spending less, Americans' savings rate rose sharply -- to 5.2 percent in the second quarter, the highest since 1998. As important as savings is, many economists wish that consumers would save less and spend more right now to help propel the recovery.
"I'm praying, 'God, please don't encourage American households to save a lot more just yet,'" said Nariman Behravesh, chief economist at IHS Global Insight.
Source: Yahoo! Finance
Subscribe to:
Posts (Atom)