Housing Slump Over

Another Clip From Businessweek - Economic Outlook


U.S.: Is The Housing Recession Starting To Recede?
The drag on economic growth is easing, and home demand is firming up

It's still way too early to celebrate, but more and more signs suggest the housing recession is starting to ease its grip on the economy........

......Over the past three quarters the residential-construction segment of real gross domestic product has robbed 1 to 1.2 percentage points per quarter from the economy's annualized growth rate. Clearly, reports on housing remain mixed, but many economists are encouraged by key trends in housing starts, new-home sales, mortgage applications, and other indicators. Some analysts even think the second-quarter drag will be half that of recent quarters.....

.......Sales of new homes soared 16.2% in April, the largest monthly gain in 14 years, reaching an annual rate of 981,000......

....One bit of corroborating evidence that demand has stopped falling is the trend in weekly mortgage applications to buy a home, which has been on the rise since February. Through May 25, the four-week average of new filings was at its highest level since early 2006, according to data from the Mortgage Bankers Assn.

ALSO, IT APPEARS the subprime loan debacle is not causing a broader restriction on credit that would depress home sales to prime borrowers. Subprime mortgages are almost exclusively adjustable-rate loans, for which applications are down sharply over the past year. However, new paperwork for fixed-rate mortgages is up 40% from a year ago. .......


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