Housing market still full of surprises
By Maxine Shapiro, KERA 90.1 business commentator
Dallas, TX – We all know the housing industry has been in a world of its own. Heck, give it its own galaxy - it deserves it. I'm Maxine Shapiro with KERA Marketplace Midday.
Housing starts - new home construction - for the month of July were up. By how much, you ask? Let's just say it was at the fastest pace it's seen since 1986! The Commerce Department reported housing starts jumped 1.5%. That brings the seasonally adjusted annual rate to 1.87 million units. Now the fact that this was the quickest pace it's experienced in over 17 years shouldn't surprise you. Economists expected a decline in new home construction.
See, they were counting on the new homebuyer to be discouraged by the recent rise mortgage rates. But guys, give the consumer a little more credit than that. Okay, back in June, 30-year mortgage rates were at 5.21%. In July, they rose to 6.24% - a full point. That's a lot. But as one very smart economist reminds us, back in early 2000 - and no one's memory is that short - mortgage rates were at 8%. So no matter how you look at it, rates are still good.
And last Tuesday it was reported North Texas pre-owned homes were up by 3% from July 2002. That surge in buying broke a six-month losing streak. And according to the North Texas Real Estate Information Systems, whose sources have been tracking home sales since November 1999, the 7,000 pre-owned single family homes sold made it a record month.
The Commerce Department also noted today building permits were down. And that's an indication that demand will be slowing for new homes. We've seen demand slow before. But the future can only be told by the movement of the interest rates. And right now, Alan and Company made no indication they're moving short-term rates higher. For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
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