In early December, the Wall Street Journal reported that wage growth, which has been slow during the recovery, is accelerating. "This is another sign that says we’re taking off," said Beth Ann Bovino, the U.S. Chief Economist at Standard & Poor’s Ratings Services. As more people find work and income stability or income growth, the housing industry will likely benefit. Stay tuned to see how the Federal Reserve will react as the economy improves.
The housing market is ending the year better off than a year ago. Revised figures from October, as reported by the National Association of REALTORS® (NAR), showed that pending home sales fell 1.1 percent from an upwardly revised September reading, but were still 2.2 percent higher than this time last year. The inventory of homes for sale was also 5 percent higher in October than a year ago.
Sales of existing homes also rose in October to the highest level in a year, as home price gains continue to ease. Home loan rates are still hovering near historic lows.
Good "Starts" for the Year
A good sign for new home construction in early 2015: in October of last year, builders were granted 4.8 percent more permits to break ground—the highest amount in six years. Total starts of single-family houses also advanced 4.2 percent annually in October to 696,000, according to the Commerce Department. While total housing starts fell 1.6 percent in November, the number of approved permits for new construction provides an optimistic start to the new year.
The Bottom Line
Rates are still at advantageous annual lows. If you have any questions regarding housing or know of friends, family or colleagues who are renting and wish to discuss buying a home this year, please get in touch.
By Taum Hemmingsen