Housing Future Looks Bright But is Dependent on the Job Market: Diana Olick
More good news on the housing market, despite the rise in mortgage rates. The latest S&P/Case-Shiller home price index gained 12.4% in July vs. a year ago--its strongest showing since early 2006. But on a month-to-month-basis, prices rose at a slower pace--1.8% in the 20-city composite of the index compared to 2.2% in June.
Related: Big Drop in Housing Starts Suggests a More Shaky Recovery: BNP Economist
"Overall the housing market is steadily gaining but it does have several headwinds--higher mortgage rates and very tight inventory," says Diana Olick, real estate correspondent at CNBC. Thirty-year fixed mortgage rates are now at 4.5%, up from 3.7% a year ago.
Related: Housing Bubble Deflated by Rising Rates
While home prices are rising--along with the stock prices of homebuilders--Olick tells The Daily Ticker they haven't moved high enough for some sellers who are still underwater (homeowners who owe more on their mortgages than their houses are worth).
Related: Housing Market Won't Recover Until Unemployment Falls Below 7%: Miller Samuel CEO
Despite the headwinds, she says the future looks bright for housing--especially for homebuilders--but ultimately what happens in housing reflects what happens in the job market.
"We've seen first-time buyers fall out of this market," says Olick. "They are usually 40% of homebuyers. Now they are less than 30%. That's because of job growth and income growth. Once we see those jobs come back the demand for new homes will come back as well."
[Check out the Mortgage Rates in Your Area]
Tell Us What You Think!
Send an email to: thedailyticker@yahoo.com.
You can also look us up on Twitter and Facebook.
More from The Daily Ticker
5 Ways a Government Shutdown Would Affect You
SEC's New Enforcement Push is Making Corporate America Nervous: Neil Irwin
