Fiscal-cliff Deal No Recipe For A Robust Economy
"We don't see the mindset of, 'Let's run up the credit card again,'" she says.
Economists are nearly unanimous about one thing: The housing market will keep improving.
That's partly because of a fact that's caught many by surprise: Five years after the housing bust left a glut of homes in many areas, the nation doesn't have enough houses. Only 149,000 new homes were for sale at the end of November, the government has reported. That's just above the 143,000 in August, the lowest total on records dating to 1963. And the supply of previously occupied homes for sale is at an 11-year low."We need to start building again," says Patrick Newport, an economist at IHS Global Insight. Sales of new homes in November reached their highest annual pace in 2Â½ years. They were 15 percent higher than a year earlier. And October marked a fifth straight month of year-over-year price increases in the 20 major cities covered by the Standard & Poor's/Case-Shiller national home price index. Potential homebuyers "are more likely to buy, and banks are more likely to lend" when prices are rising, says James O'Sullivan, chief U.S. economist at High Frequency Economics. "It feeds on itself." Higher prices are also encouraging builders to begin work on more homes. They were on track last year to start construction of the most homes in four years. Ultra-low mortgage rates have helped spur demand. The average rate on the U.S. 30-year fixed mortgage is 3.35 percent, barely above the 3.31 percent reached in November, the lowest on records dating to 1971. Housing tends to have an outside impact on the economy. A housing recovery boosts construction jobs and encourages more spending on furniture and appliances. And higher home prices make people feel wealthier, which can also lead to more spending.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts