Academic journal article ABA Banking Journal

Housing Bounces Back: All Signs Point to a Consistent Recovery

Academic journal article ABA Banking Journal

Housing Bounces Back: All Signs Point to a Consistent Recovery

Article excerpt

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THE SIGN ON THE FRONT LAWN OF THE HOUSING MARKET IS A POSITIVE one, and it's pointing to a growing recovery. "Strong growth demonstrates that housing has finally caught up with the broader economic recovery," says Scott A. Anderson, Ph.D., senior vice-president and chief economist of Bank of the West, and chairman of the ABA Economic Advisory Committee. "We see gains in housing starts, permits, sales, and home prices. All these things are going to help rebuild consumer confidence and spending. These are drivers that we haven't seen in the economic recovery so far."

There is still some concern that the Federal Reserve could hurt this recovery by dialing down on its asset purchases by year's end and exiting too soon from its accommodative policy. But so far, that concern seems to only have affected mortgage rates, which rocketed up to 4.07% for a conventional 30-year mortgage in June before falling back a bit. This rate hike may further discourage refinance applications, but should not have a major effect on home purchases and mortgage applications.

In fact, new-home sales reached a five-year high in June at a rate of 497,000 units, which is 8.3% above May's pace and 38% above last year's levels. …

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