Housing Future Looks Bright But is Dependent on the Job Market: Diana Olick
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Mortgage lending is picking up. There has been increased demand from investors, prompting the Reserve Bank to warn on Wednesday in its Financial Stability Review (FSR) that “it is important that those purchasing property do so with realistic expectations of future dwelling price growth”. Please Log in to update your video settings Video will begin in 5 seconds.
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The latest S&P/Case-Shiller home price index gained 12.4% in July vs. a year ago–its strongest showing since early 2006. But on a month-to-month-basis, prices rose at a slower pace–1.8% in the 20-city composite of the index compared to 2.2% in June. Related: Big Drop in Housing Starts Suggests a More Shaky Recovery: BNP Economist “Overall the housing market is steadily gaining but it does have several headwinds–higher mortgage rates and very tight inventory,” says Diana Olick, real estate correspondent at CNBC. Thirty-year fixed mortgage rates are now at 4.5%, up from 3.7% a year ago. Related: Housing Market Won’t Recover Until Unemployment Falls Below 7%: Miller Samuel CEO Despite the headwinds, she says the future looks bright for housing–especially for homebuilders–but ultimately what happens in housing reflects what happens in the job market.
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