Recovery around the corner??

by Kenneth R. Harney
If rising sales, rising consumer confidence, and rising new construction are keys to a
rebound ahead in the home real estate market, it looks like we're well into recovery
mode.
That's because this week, all three of those important indicators are strongly positive. On
top of that, we've got low mortgage interest rates…and an eight thousand dollar home
buyer tax credit - working as well.
Take consumer confidence if you really want proof: After six months in the doldrums,
consumers' attitudes about the national economy and their own personal financial
situations took a major jump to the positive side in the past month.
The Conference Board's national Consumer Confidence index soared to its highest level
in eight months, up 14 points in the span of just 30 days. That's crucial for future home
buying and selling behavior because when people are worried about their economic
futures, they stay on the sidelines.
Lynn Franco, director of the Conference Board's research center, said the latest numbers
show that consumers are now considerably more optimistic about everything from jobs
to their own finances - more so than they've been for most of this recession.
A second important indicator last week came with the National Association of Realtors'
monthly home sale report. Sales of single family homes, condos, townhomes and
cooperatives jumped nearly three percent in April -- with the biggest gains at the
lower-priced segments that appeal most to first-time buyers seeking the $8,000 tax credit.
In the Northeast, sales jumped nearly twelve percent, in the West by three and a half
percent, and in the South by two percent. Only the Midwest saw a decline -- by about
two percent.
New home building starts and permits are also on the upswing after months of negatives.
In hard-hit California, new home starts increased 21 percent in April over March -- the
most dramatic jump since last October.
Bob Rivinius, head of the California Building Industry Association, said "month to month
increases (in sales) indicate that builders are (finally) clearing out their inventories and
starting to build again."
Mortgage rates have hovered just under five percent, with the average thirty year fixed
rate loan going for 4.8 percent last week … and 15 year money stable at 4.4 percent. But
there are inflationary pressures at work in the market, so don't be surprised if mortgage
rates rise in the coming weeks.
The main sobering news last week was on prices. According to the federal government's
home price index for purchases, prices were down by an average one half of one percent
in the first quarter, and by 7.1 percent when compared with the first quarter of 2008.
Published: June 2, 2009
www.realtytimes.com