WASHINGTON – From purchases and prices to builder sentiment and construction, the U.S. housing market is making consistent gains.
The latest evidence came in reports Monday that sales of previously occupied homes rose solidly in October and that builders are more confident than at any other time in 6 1/2 years.
New-home sales and home-price indexes have reached multiyear highs. And Lowe’s Cos. on Monday reported a surge in net income, a sign that home-improvement retailers are benefiting.
The housing market’s recovery still has a long way to go. But for now, it’s helping prop up an economy that’s being squeezed by a global slowdown and looming spending cuts and tax increases.
Joseph LaVorgna, an economist at Deutsche Bank, estimates that the housing recovery could boost U.S. economic growth by a full percentage point next year. That’s because a stronger housing market would mean more jobs, especially in industries like construction, and more consumer spending.
Housing could provide a meaningful – and critical – lift to overall economic activity when other growth drivers, like exports, are slowing, LaVorgna said.
Helping drive the housing rebound is growing confidence among builders. An index of builder sentiment compiled by the National Association of Home Builders/Wells Fargo rose to 46 this month, up from 41 in October. It was the highest reading since May 2006, just before the housing bubble burst.
Readings below 50 signal negative sentiment about the housing market. The index last reached that level in April 2006. Still, the index has been rising since October 2011, when it was 17. It’s surged 27 points in the past 12 months, the sharpest annual increase on record.
A second report Monday said sales of previously occupied homes are near five-year highs, excluding temporary spikes in 2009 and 2010 when a homebuyer tax credit boosted purchases. Sales rose 2.1 percent in October to a seasonally adjusted annual rate of 4.79 million, the National Association of Realtors said.