QuickTakes | Industry headlines, statistics and trends
A Sunny Outlook
Clockwise from top left: Evgeny Dubinchuk/Thinkstock; Sunstock/Thinkstock; Dragon Images/Thinkstock
At a late January meeting, Federal Reserve officials noted hopeful signs about the state of the housing market, consumer confidence and the economy at large. Minutes from the meeting convey officials’ belief that strong consumer spending is driving an improving economic outlook and that the housing sector plays a key role in that recovery. “The pace of activity in the housing sector showed some tentative signs of stabilizing, as the effects of the past year’s rise in mortgage rates appeared to wane,” the report says. “Single-family housing starts increased in November and only partly reversed that gain in December, while permits for new construction rose a little, on balance, in the fourth quarter. New-home sales declined in November and December but were nonetheless higher than in the third quarter, and existing-home sales flattened out in December after decreasing for several months.” “Although the recovery in the housing sector had slowed somewhat in recent months … various factors were seen as likely to support stronger growth in the sector going forward, including favorable housing affordability, which was in turn partly due to still-low mortgage rates, and demographic trends,” the report says. “However, there were also reasons for being cautious about the prospects for housing construction, such as recent disappointing news on permits for new construction and the possibility that investors’ interest in purchasing properties for the rental market would recede.”
HOME PRICE INDEX SHOWS 2013 GAIN
Home prices ended 2013 up 11.3 percent from the year earlier, according to the S&P/Case-Shiller Home Price Index. Year over year, the 10-city and 20-city index composites posted gains of 13.6 percent and 13.4 percent. The index ended its best year since 2005, says David M. Blitzer, chairman of the Index Committee. “However, gains are slowing from month to month, and the strongest part of the recovery in home values may be over.” Blitzer says the data indicate that the market has lost some of its momentum. Still, all 20 cities included in the 20-city index composite posted yearover-year price increases in 2013, ranging from 25.5 percent in Las Vegas to 4.5 percent in Cleveland.
HOME AGAIN More than 24 million young adults ages 18–34 are living with their parents or parents-in-law, according to analysis by the National Association of Homebuilders. The study attributes the trend to tough economic conditions, rising unemployment rates and increased housing costs in the late 2000s. Older young adults (ages 24–34) typically compose approximately half of all first-time homebuyers. But their delayed willingness and ability to leave their parents’ homes contributed to lower housing demand during the recession. Young adults living with parents are twice as likely to be unemployed (14 percent in 2012) compared with those who live on their own (7 percent). On average, states with larger increases in unemployment rates among young adults registered larger gains in the percentage of young adults living with parents, the study finds.
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