With pending home sales on the rise for the fourth straight month – and reaching their highest level in nine years, according to Thursday’s pending home sales index from the National Association of Realtors – this article from Reuters examines housing’s affect on the outlook for the overall U.S. economy.
While other data on Thursday showed an unexpected increase in new applications for unemployment benefits, filings remained at levels consistent with a tightening labor market.
The jobless claims and housing data joined upbeat reports on consumer confidence and business spending plans that have hinted the economy might finally be gaining steam as some drags on growth in the first quarter either fade or ease.
April data on retail sales and industrial production had pointed to modest growth early in the second quarter.
Firming housing and the tightening jobs market will likely keep the Federal Reserve on track to raise interest rates this year.
Housing is being supported by the strengthening labor market, which is encouraging young adults to move out of their parents’ basements and setting up their own households.
While tight inventories are pushing up house prices and constraining activity, there is hope higher home values will encourage more homeowners to put their houses on the market and builders to break more ground on new projects.
