Sales of new, used properties expected to show further gains
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Consumers are feeling pinched by higher taxes and business investment has been choppy, so it’s a good thing the housing sector continues to build up speed.
Construction on new properties rose in December at the fastest clip in four years and the sale of new homes in the last month of 2012 is likely to remain at a two-and-a-half-year high. What’s more, existing homes are selling at their strongest pace in three years.
Sales of existing home for December will be reported Tuesday by the National Association Realtors. Sales of new homes — the most important economic lodestar of the week — comes out Friday. They are the highlights of a holiday-shortened week.
Nick of time
The rebound in housing is a big deal. The manufacturing sector, which led the U.S. out of recession in 2009, cooled off considerably in the second half of the year. Businesses also became more skittish about hiring and investment. So some other sectors have to take up the slack. ….
Economists at Bank of America/Merrill Lynch estimate that spending on residential construction will increase to 17.5% in 20013 from about 12% in the prior year.
Super-low interest rates have been a spur for new home sales and construction. And as more homes are sold, prices rise and bring in other buyers who don’t want to wait until bids go beyond their reach.
What’s also helping is a decline in the sale of distressed homes, whose low prices have attracted buyers who might otherwise purchase a newly built property. Such sales fell to 22% in November from 29% one year earlier as the number of foreclosed homes dwindles.
“There couldn’t be a better time for housing to kick in,” said senior economist Ryan Sweet of Moody’s Analytics. “Overall 2013 is going to be a very good year.”