If experts' predictions are correct, then consumers who have been looking for signs the housing industry is ready to reverse the dismal course it's been on the last several months and be less of a drag on the economy may not have to wait much longer.
Chris Varvares of Macroeconomic Advisers Llc. says, "The worst of the drag on the economy from construction is behind us."
The president of the St. Louis, Mo.-based company says as a result, growth should increase to an annual rate of more than three percent in the second quarter, up from 2-� percent in the current quarter.
That, he adds, would lessen the pressure on the Federal Reserve to reduce interest rates disappointing bond investors who expect Federal Reserve Chairman Ben Bernanke will cut rates as soon as May.
Another source at credit rating company Fitch Inc., New York, agrees, noting investors are optimistic a change in the momentum in the housing market is imminent.
The National Association of Realtors reported that sales of existing homes rose in Nov. 2006 for the second consecutive month, and the association opined that the level of sales activity suggested "a turn in the market." That was the first back-to-back monthly gain since late 2005. New home sales are also up.
Total housing inventory levels fell one percent at the end of November to 3.82 million existing homes available for sale, said NAR. That represents a 7.3 months supply at the current sales pace.
In addition, the Mortgage Bankers Association reported that for week ending Dec. 29, mortgage loan volume was up 3.6% from the previous week.
Looking back to 2006, NAR chief economist David Lereah said, "As the housing market recovers from its correction, existing-home sales should be rising gradually during 2007 � it looks like we may have reached the low point for the current cycle in September. We've entered a more sustainable period of home sales now, and we expect greater support for prices over time as inventory levels are eventually drawn down."
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