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In legislation news this week the National Association of Home Builders (NAHB) is applauding Representatives Gary Miller of California and Brad Miller of North Carolina for introducing bipartisan legislation aimed at "the flow of acquisition, development and construction (AD&C) credit to the housing sector to help spur job growth, support a recovery in the housing market and keep the economy moving forward."
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According to the NAHB, "The credit crunch has taken an enormous toll on the nation's economy, with job losses felt most acutely in the housing sector, where more than 1.4 million construction workers have been idled since 2006. Factoring in the effect of the housing plunge on industries that provide materials and services to home builders, the total impact of the housing slump has been the loss of more than three million jobs and $145 billion in wages in all housing-related industries."
This legislation is aimed at granting authority and guidance to both federal and state banking regulators. Why is this? It hopes to provide financing to builders to provide a more stable housing sector.
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Existing-home sales defied the slump in the first quarter of 2011. The National Association of Realtors (NAR) reports that gains were recorded in 49 states as well as the District of Columbia.
The pace of existing-home sales rose 8.3 percent, down just 0.8 percent from year ago levels. Lawrence Yun, NAR chief economist, notes, “The rising sales trend in nearly all states is a part of the healing process to clear off inventory. Sales need to rise before prices can firm up,” Yun added.
For now, prices are on the decline. The national median existing single-family home price was $158,700 in the first quarter, according to the NAR, down 4.6 percent from $166,400 in the first quarter of 2010.
Yun says lower priced homes have seen the best sales performance. “The biggest sales increase has been in the lower price ranges, which are popular with investors and cash buyers,” he said. “The preponderance of sales activity at the lower end is bringing down the median price, so what we’re seeing is the result of a change in the composition of home sales.”
There are numerous influencing factors of sales. One of those is interest rates. Will interest rates rise from their historically low levels any time soon?
According to Federal Reserve President, Jeffrey Lacker, the Federal Reserve may need to raise interest rates later this year to deal with inflationary issues.
Lacker said in a recent interview, "I expect to see employment grow at about that pace going forward this year, maybe picking up pace toward the end of the year. ... We need to be careful that we don't let inflation overshoot."
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