Housing Market Sails Forward

housing moving forwardThe U.S. economy just can’t seem to get a strong, sustained wind in its sails. Choppy financial waters overseas are a key reason. But the nation’s housing sector has continued to cruise ahead despite the way the performance of the broader U.S. economy has been put at risk by the troubles abroad.

Due in the coming week are a couple of readings on the housing market that should show more smooth sailing. Longer term, the question remains whether the U.S. economy can remain sufficiently resilient for the Federal Reserve to finally pull the trigger on the 1st interest rate hike since 2006.

Housing Sector ‘Renovation’ Still in Progress

The housing market was the economic equivalent of “ground zero” for the financial crisis, which morphed into the Great Recession. But that is mostly a distant memory at this point, at least from a statistical standpoint.

This week, the homebuilders’ trade group releases its monthly sentiment index. The previous reading stood at the highest level since October 2005, or before the crisis hit. Keep in mind volatility is seen in the data from 1 month to the next. Longer-term trends are more important, and they’re looking good. Homebuilders’ confidence is elevated and starts should continue to move upward. Household formation and improvement in the labor market should support this improvement.

Other housing metrics are also on the rise. For the past several years, we have seen an upward trajectory in both new homes sales, existing home sales, as well as on the supply side, in the construction activity, housing starts and building permits as well.  But housing, at least on a national basis, isn’t near a peak, the housing market has a lot of room to run.

Fed Likely to Punt Again on a Rate Hike

While it managed to sink the economy into recession, the housing market can’t lift the economy all by itself. Weakness abroad, virtually nonexistent inflation and financial market volatility were cited by the Federal Reserve when it decided to leave interest rates unchanged last month.

Recent data have been mixed, including a rebound in consumer sentiment and a decline in industrial output. Fed officials have 2 more meetings scheduled this year, including 1 at the end of this month. Experts believe the chances of a December rate hike are higher than in October.

It is doubtful that the Fed will raise rates in October, as there have not been any significant change in the economic outlook since the previous meeting. Any improvement in market stability is at least partly due to the assumption the Fed will not act in October. If the Fed were to raise rates this month, it could throw the financial markets for a loop.

Growth Not So Hot

Take the pulse of the U.S. economy at the moment and you detect a patient that isn’t in critical condition but does bear watching. An attempt to capture growth on a real-time basis, the Federal Reserve Bank of Atlanta’s “GDP Now” indicates growth in the 3rd quarter was running at 0.9%. September jobs creation was below expectations with 142,000 jobs added to payrolls.

Last year at this time, the economy was revving up, resulting in a string of jobs-creating months. Now, in the final months of 2015, we’re not seeing signs of a similarly robust surge.

We’ll Help You Become an Informed Buyer or Seller

We truly believe that the more informed buyers and sellers are about the housing market, the more likely they are to enjoy a successful outcome on the market.

That’s why we bring you pertinent information about the housing market every month.

Contact us for further assistance, or check back here soon for even more information about the current state of the housing market and how it may affect you.

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