The housing market is finally showing signs of a turn around after a long period of recession. Although other segments of the economy have been steadily improving for a while now, the lack of any significant improvement in housing statistics was rather disconcerting.
Although there have been clear indications over the past few months that consumer spending is on the rise, this progress was not reflected in housing stats. Given this, the announcement of March figures by the National Association of Realtors showing a 6.8% spike in existing home sales comes as a huge relief, especially as it comes after a long 3 month wait. Sales figures when compared year on year were also 16.1% higher.
The progress is even more heartening because it exceeds the 5.29 million annual units expected by analysts to be sold in March. The actual sales figure at seasonally adjusted rates was 5.35 million units.
The spike in the housing segment is once again being attributed to President Obama’s housing segment support programs. The First Time Home Buyer tax credit and its successor the Home Buyer tax credit for repeat buyers are being given the credit for the current positive state of affairs. The extended Home Buyer tax credit has a final deadline of April 30th and analysts do not expect yet another extension to this hugely popular program. A significant $8000 tax advantage awaits new home owners while qualified second time buyers or move up buyers can get up to $6500 in tax breaks. These huge incentives are propelling the demand for housing units as the program deadline draws near.
Although the industry peak figures of 2007 have not been reached yet, the fact that there is positive movement here is a significant improvement for the segment which has been plagued by instability for the past few years.
An unexpected boost to the sale of houses is being attributed to the weather, which has remained warm in recent weeks. The weather did play spoil sport earlier, during the first two months of the year, when the unexpectedly cold winter and unpredictable winter storms kept activity subdued.
In March, improvement was seen across all kinds of homes – single family homes, condos and co-ops. While single family homes showed the best gains, sales of the other two also rose about 1/3rd from last year. These developments indicate an all round return of confidence in the market which is critical for sustained growth. However, some analysts believe that steady growth in housing demand will hinge on the improvement in employment opportunities.