Good News in the U.S. Housing Market

The U.S. housing market might have some good news, Reuters reported on Sunday. It seems that for the first time since 2005, U.S. residential construction might be expanding a little next year. It might, in turn, add a little to GDP growth in 2012. It would add not much, of course, but it would complement the picture of a slowly improving U.S. economy.

Some analysts pointed out to a few core factors that suggest a turning point in the housing market. The inventory of new homes is at its lowest: 162,000 properties. If demands increases, supply would be tight next year. The inventory of unsold existing homes seems to be smaller as well which could support future growth.

The National Association of Home Builders sentiment points out that optimism is slowly improving. The S & P Home Builders Index rose more than 20 percent in the last quarter. Another interesting factor is that mortgage lenders have somewhat loosened down payment requirements, which in turn would allow more people to buy.

Construction of renting units is also slowly increasing. This trend is expected to continue in 2012.

But for the economy to turn around we also need a strong job market, income growth and positive economic reaction. So far personal income has not been keeping up with inflation. Without these supporting factors, the housing market will remain weak, and even low mortgage rates and loosened down payment requirements won’t help.