Housing Recovery at Last? Evidence Mounts

While experts continue to warn that housing has not yet hit bottom, a slew of indicators suggest otherwise. The latest is a stellar quarterly earnings report from Home Depot, which is benefitting from hopeful owners sprucing up for the spring selling season.

Among other hopeful signs

  • The job market is improving. Last month, unemployment hit its lowest level in three years. The unemployment rate has improved five months in a row.
  • Homebuilder sentiment in February climbed to its highest level in nearly five years.
  • Housing stocks are soaring. The stock market isn’t always right. But it often predicts developments six to nine months down the road—and companies that build houses have seen share prices increase 60% since October. Home Depot stock has rallied in similar fashion, in part because people who buy homes tend to spend money fixing them up.
  • New housing starts in January nearly matched November’s three-year high.
  • Sensing a turn, big investors are buying mortgage securities as eagerly as they once sold them.
  • State and federal authorities have reached a $26 billion settlement with big banks that is expected to provide some mortgage relief and possibly ease the foreclosure nightmare.

Yes, we’ve seen false bottoms before

The foreclosure mess, especially, still hangs over the market. But housing downturns like this one end at some point—and most people are surprised when it happens.

Keep an eye on mortgage rates. If they start to move up it may push buyers to act before they miss the lowest rates on record—and then higher prices would follow.

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