The U.S. housing market won't recover until employment increases and consumers become more confident
(Bloomberg)—The U.S. housing market won't recover until employment increases and consumers become more confident, according to panelists at a Real Estate Briefing hosted today by Bloomberg Link in New York.
"When things turn and there is job growth and there is consumer confidence back, then we'll see a change," said Douglas Yearley, chief executive officer of luxury homebuilder Toll Brothers Inc., based in Horsham, Pennsylvania. "We have to get job growth back."
Sales of existing homes have tumbled this year amid unemployment that is near a 26-year high and a lack of confidence in the recovery of the world's largest economy. In September, homes sold at the third-slowest pace in a decade of data, after reaching a record low in July, according to the National Association of Realtors. The jobless rate has stayed above 9 percent for 17 consecutive months, according to the Bureau of Labor Statistics.
"We have a jobless recovery," Thomas Shapiro, president of real estate investment firm GTIS Partners in New York, said during a panel discussion that also featured Henry Elghanayan, chief executive officer of New York-based Rockrose Development Corp. "Everything will be good if we can just create jobs."
Jobless claims rose by 20,000 to 457,000 in the week ended Oct. 30 from a revised 437,000 the prior week, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance fell, while those on extended payments increased.
Calling progress toward lower joblessness and faster growth "disappointingly slow," Federal Reserve policy makers yesterday announced plans to bolster the recovery through another round of large-scale asset purchases.
Confidence among U.S. consumers rose in October from a seven-month low, the New York-based Conference Board reported Oct. 26. The percentage of consumers who said they plan to buy a home in the next six months rose to 2.1 percent from 2 percent in the prior month, according to the research group.
Sales of U.S. existing homes increased in September, a sign cheaper borrowing costs are helping to stabilize demand. Purchases increased 10 percent to a 4.53 million annual rate from 4.12 million in August, the Chicago-based National Association of Realtors said in an Oct 25 report. The median price fell 2.4 percent from a year earlier.
The average U.S. rate for a 30-year fixed mortgage fell to an all-time low of 4.19 percent last month, according to McLean, Virginia-based Freddie Mac. The rate is 4.24 percent this week, the mortgage financier said today.