The tone of the housing market appeared a bit rosier this week, leading some to move their debate from whether the market has hit a bottom to what a recovery in housing would mean to the economy.
Data this week showed more homes sold and inventories of new homes depleted to record lows. By some measures, prices were also rising this summer. Fewer people are seeking to refinance as mortgage rates have started to creep higher, but applications for new home loans still increased.
"Housing has gone from a big negative to neutral" for the economy, Mark Zandi, chief economist at Moody's, said on the Daily Ticker. "By this time next year it will be a plus, and two years from now a big plus and one of the reasons the economy will be growing much more quickly than many think in 2014 and 2015."
Mortgage rates rose for the fourth week in a row, along with long-term yields. The 30-year fixed rate to 3.66%, up from 3.62%, and the 15-year fixed rate edged up more slightly to 2.89% from 2.88%.
The turn in prices comes after months of record lows. (See the chart below.)
As rates continue to increase, the Mortgage Bankers Association's refinance index fell 9% last week. That led to a 7.4% decrease in the market composite index, which tracks mortgage application volume. But rates haven't stifled all demand. The seasonally adjusted purchase index still ticked higher, by 0.9% from the week prior.
To boot, data on Thursday showed new home sales rose to 372,000 in July, up from an upwardly revised 359,000 in June, following an increase in existing home sales announced earlier in the week. Inventories fell 0.7% to a record low of 142,000. As of July, it would take 4.6 months to clear the houses from the market.
Despite the rise in sales and the decline in inventories, the median price of a new home fell 2.5% in July to $224,200, according to the report.
Slightly more retrospective data -- reflecting June -- that were released on Thursday show prices increasing. The FHFA Housing Price index rose 0.7% in June, after an 0.6% uptick the month prior.
Meanwhile, luxury homebuilder Toll Brothers (TOL) reported on Wednesday that its second quarter revenue increased 41%, helping to spur a 46% increase in profit.
"We believe the housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes," said CEO Douglas Yearly in a release. "Customers who have postponed buying for a number of years are moving into the market. With an industry-wide shortage of inventory in many markets, we are enjoying some pricing power."
What do you think: Is the recovery (finally) underway? Or is it just a blip in a market that will prove stagnant at best? Let us know in the comment section below.