In Housing Market Upswing, Banks Win First and Biggest
NEW YORK ( TheStreet) -- Buyers are creeping back into the U.S housing market, which is having a ripple effect on the U.S. economy -- and a highly positive effect on banks and mortgage lenders.
While December wasn't exactly a bullish month for housing, the overall market is trending upward, according to the U.S. Commerce Department.
"Sales of new single-family houses in December 2012 were 369,000 at a seasonally adjusted annual rate, down 7.3% from November's revised rate, but up 8.8% from December 2011," the Commerce Department says. "For 2012 overall, new home sales increased 19.9% from 2011."
That should benefit homeowners, who are seeing their home values rise modestly. It also benefits the economy, as homeowners historically spend more when their home values climb.Yet perhaps the biggest beneficiary of housing market growth are banks, who could see double-digit growth in mortgage lending in 2013, according to Turner Investments, a Berwyn, Pa.-based financial services firm. The firm's analytical arm has released a report called How the Housing Recovery Is Helping Banks and Title Insurers. In it, researchers say any potential housing boom is tied tightly to the mortgage market. "Just as you can't talk about the original movie version of King Kong without mentioning Fay Wray, it's hard to talk about the state of mortgage lending without referring to the health of the housing market," the report says. Turner points to an uptick in new homes and home-building activity, which is at its highest level since 2008; residential home building permits rising to 899,000 in November; and home builder sentiment hitting its highest levels since 2006 after eight consecutive months of growth. Some other data from Turner:
- New home sales should rise from 375,000 last year to 485,000 this year and to 640,000 in 2014.
- Residential real estate investment will make up 3.5% of all U.S. gross domestic product by 2015 -- up from 2.2% in 2011.
- New households -- Turner calls them "housing formations" -- should reach 1.3 million in 2013, up from 500,000 in the midst of the Great Recession. The firm says a slowly stabilizing employment market has led more Americans, especially younger ones, to take the leap to homeownership.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
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
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV