The outlook is good: one of the worst real estate declines in history is finally coming to an end. With homebuilder stocks on the rise and single-family home construction and sales reaching their highest levels in years, economists are looking optimistic about the future of the housing industry.
This past August, home sales and new construction of single-family homes was at its highest level since 2010, rising 2.3% on a month-over-month basis. This figure, which is coupled with confidence from US homebuilders who are enjoying their highest level since 2006, is a solid indicator that the housing market is improving.
Homebuilder stocks have so far been one of the top performers this year. In the past twelve months, some homebuilder stocks have actually been 100% higher than they were previously. Existing home sales are also seeing a surge. Levels are currently mimicking those seen in 2010, when there was an increase in sales due to a first-time homebuyer tax incentive from the government.
This new data suggests what some are calling the most promising report since 2007. Home sales do need to see a lot more improvement before they’re considered back to their pre-crisis levels, but these recent trends are certainly good news.
Economists theorize that low interest rates, and improving economy, and a drop in the cancellation rate may be motivating this latest upward trend. Of course, even with these new figures, we are not completely out of hot water yet. Considering the amount of damage that the market incurred during the housing crisis, there is a lot still to be managed. A wide inventory of existing homes yet to be sold and residual damage to properties and the market remain an issue for real estate professionals.
Nevertheless, the seeds for a more successful future are being sowed.