The Wall Street Journal reports that two of the most important indicators of health in the housing market—construction of new homes and sales of pre-existing homes—both rose last month to highs not seen in the past four or five years.
The numbers on existing-home sales are particularly encouraging, as they mean that we are finally cutting into the massive inventory of unsold homes caused by the recession. Now prices are beginning to rise again:
Prices are rising amid sharp declines in the number of homes listed for sale. Just 2.14 million homes were for sale at the end of October, down 22% from one year ago to the lowest level in a decade, according to NAR estimates.
A sale was pending recently on a Peoria, Ill., home. Sales of existing homes hit 4.79 million units in October, their second-highest level of the year.With more buyers chasing dwindling inventories of homes—and, in particular, fewer foreclosed properties that sell at steeper discounts—prices are beginning to rise in more markets. The national median home price rose by 11.1% from one year ago in October to $178,600, according to the NAR.
The news on new construction is promising as well:
U.S. home building rose in October to its highest rate in more than four years, the latest sign that the once-troubled housing market is improving.
Housing starts increased 3.6% last month from September to a seasonally adjusted annual rate of 894,000, the Commerce Department said Tuesday. Compared with a year earlier, new-home construction was up 41.9%. It is at its highest rate since July 2008, before the depths of the financial crisis.
If the government can manage to avoid the fiscal cliff next month and if the Europeans don’t do something especially stupid, our economy might just have a decent foundation on which to build. Here’s hoping.