http://www.reuters.com/article/2013/01/25/us-new-home-sales-idUSBRE90O0OB20130125
During 2012, Americans purchased 367,000 new single-family homes--a 19.9% increase from 2011. The success in 2012 peaked in November, when home sales reached a three-year high. Still, though, the success in the housing market in 2012 was only about 1/3 of the total home sales in 2005, when record highs were followed by a housing market downfall. Could this recent success mean an emergence by the US economy from its recession? Even though the housing market is a small park of the total economy, we've learned in the past that it plays a pivotal role in economic stability. Housing market troubles, generally, have spelled trouble for the economy. So, then, is the converse true? Does housing success spell economic success?
I think this is obviously a sign of the economy recovering, and it seems to me that we are coming out of our economic recession, but I don't necessarilly think that housing success spells out economic success. It is optimistic and does tell a lot about the economy, but as sited in the article, there are ups and downs. The article stated, "In December, sales cooled in three of the four major regions tracked by the government, climbing only in the Midwest." If it really is a tell-tale sign of economic recovery, wouldn't we see a constant rise? My point is that this was labeled a "temporary blip." What makes us think that there won't be more of these? The housing market can change based on many factors, so is it really that great of a measure/indicator of economic growth?
ReplyDeleteHouse prices should depreciate over time - they'll need renovation or rebuild. Land value should go up if there are impetus such as large immigration, population movement etc - demand increases. New home construction, renovation, does generate jobs and economic activity. The sale of existing homes generates a little low skilled activity and inefficient local tax base. I think that to measure an economy based on prices of houses people live in is not really effective.
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