US housing market boom bangs along
With all the gasping noises the US economy is making rising fuel prices, underperforming stock markets, poor jobs data, and upwardly creeping interest rates it is amazing that US consumers are continuing to snatch up homes at a near-record pace.
With a little more than a quarter of 2005 in the books, industry analysts are scrambling to boost their full-year projections data. Some economists are beginning to think that 2005 could post better housing numbers than the record-breaking 2004.
Several factors may be responsible for the housing boom, including an aging population, new families forming new households, and a rush by consumers to lock in mortgages while interest rates are still relatively low.
On Tuesday, the US Commerce Department reported that sales of new US homes soared 12.2% in March. The continued trend of year-to-date increases ran counter to Wall Street expectations.
The home sales data sparked a rally in homebuilder stocks, causing the Dow Jones US Home
Construction Index to jump 2.02%. The positive news sent Treasury debt prices lower.
Despite the rosy housing picture, economists and analysts continue to assert that there is no national housing bubble. Supply still cannot meet demand as prices remain overly inflated; however, these factors are largely region dependant, with the most expensive areas being the West and Northwest.