http://www.nytimes.com/2010/01/21/business/economy/21econ.html?ref=business
Despite the pessimistic tone of the title of this article, it is actually an optimistic view on the Housing Construction Industry. Although the housing construction fell 4% from November to December, building permits were up 10.9%, which far surpassed expectations.
“We’re on the way to recovery,” said Patrick Newport, an economist for IHS Global Insight. “We can expect to see sustained increases and the pace picking up over the course of the year.
This optimism is great, but the actual housing market is still down, and the construction rates, although higher are still at record lows comparably.
I think it’s also important to look at the National Association of Home Builders’ index, which measures home builder future sales expectations. The index is at its lowest since June, indicating builders are not confident about future sales of both new and existing homes on the market. Historically spring time is when builder confidence levels should rise and in the coming months if the NAHB index still remains low this should be a good indicator of how builders feel about decreasing the large inventory of new and existing house. Economists find the purchasing of homes a good indicator of economic expansion due to the fact that new home owners also tend to buy a lot of durable goods and ‘big ticket items’ along with their new home. This translates into good news for the U.S economy. Economists are confident that the housing sector is stabilizing and this is believed to be due to the extended home buyer tax credit through April 2010 and the current low interest rates.
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