You’ve likely heard some scary news about the recent dips on Wall Street. But take comfort in this sign of a thriving economy: the housing market is getting increasingly stronger and is recovering from huge dips in 2008 and 2009.
Even though recent gains may not totally make up losses from the housing crisis, several key indicators show significant housing market growth. Read about the good signs analysts are seeing now.
Home Depot, which is the largest home improvement retailer in the word, said that it has processed a record number of transactions in the past three months alone. Shoppers are spending more on home improvement than they’ve spent in nearly a decade, since 2006. Spending on home improvement often means that customers are either doing work on houses they’ve just bought or are getting ready to sell them. Customers are also spending more on new appliances and décor, another sign of confidence.
New Home Construction
The home construction market showed record-setting growth in April and has continued to show solid growth throughout the summer. The number of building permits and housing starts (buildings intended for residential use) is recorded by the U.S. Census Bureau. In July, the number of housing starts was 1.206 million, surpassing expectations of 1.180 million by a significant number. Housing permits fell some in July but are still in a good place after solid growth in June.
The August release of the Housing Market Index (HMI) reflected the number 61, which is number that has not been seen since November of 2005—so clearly, we’ve come a long way since the housing crisis. This number is a weighted average of several different indexes. The HMI’s future sales component was listed at a very solid 70, while the current sales component was listed at 66.
Most home prices rose during the second quarter, according to the latest report from the National Association of Realtors. 93% of homes in measured markets increased, a move being driven by low mortgage interest rates, a booming rental market, and strong jobs markets that have fueled the demand for homes. In particular, the booming rental market has caused housing shortages. Many investors have continued to snap up single-family homes and then convert them to rentals. The median price for a single-family home was $229,400, up 8.2 percent from the second quarter of 2014. This is great news for homeowners.
As an important side note, Millennials, who have been notoriously reluctant to get into the housing market and buy, are starting to venture in. These are people who were graduating when the housing market tanked and often had to move back in with parents. They also watched people lose their homes and thus have been especially cautious to buy. This recent trend is largely the result of a stronger jobs market.
Photo by geraldbrazell