Following the 2008 housing crisis it appeared that housing may have lost its power over the economy. Many economists and analysts, failing to understand the impact of home ownership on the American psyche, declared that homeownership and housing would never regain its position of influence over the US economy. The truth is that as housing has gone, so has the US economy. Housing’s pain has been our economy’s pain and as the housing market has recovered, so has the overall economy.
Is it any wonder then, that after an incredibly harsh winter, our economy posted its worst quarter of growth (-2.9%) since the Great Recession? The spring home buying season got off to a slow start with fewer new homes built and fewer renovations and repair projects undertaken to prepare existing homes for sale.
Yet, as summer begins, the housing tide is rising, and the US economy is likely to be coming along for the ride. According to the National Association of Realtors®, existing home sales in May rose at the strongest rate since August of 2011. The 4.9% increase was stronger than forecasts. Pending home sales, (homes under contract for sale yet not yet closed) have also been stronger than forecasts: 3.4% increase in March, .4% in April and 6.1% in May. These figures represent the highest level since the homebuyer tax credit was about to expire in 2010.
Recent housing data suggest that Americans are taking action as it relates to their housing situation. No longer are they waiting for housing conditions to improve. Prices for homes are up, mortgage rates remain near historic lows and first-time homebuyers are increasing in numbers. These are the necessary ingredients to a thriving, housing-based economy that is poised to once again be the engine of our nation’s economic strength. The housing tide is rising and it will lift all boats.
We thought you would like to know. Thanks for reading!