Purchases of new homes, logged when contracts are signed, rose in September to the highest level in more than two years, the Commerce Department said yesterday. Sales of previously owned U.S. homes decreased from the highest level in two years, the realtors’ group reported on Oct. 19.
Property values also are improving. The S&P/Case-Shiller index of home prices in 20 cities increased more than forecast in July from a year earlier, according to Sept. 25 data from the group, which is set to release the next report on Oct. 30.
Sustained declines in borrowing costs are supporting the industry. The average rate on a 30-year fixed mortgage dropped to 3.37 percent in the week ended Oct. 18, near a record low of 3.36 reported Oct. 4, according to data from McLean, Virginia- based Freddie Mac that dates back to 1971.
The Fed last month announced the third round of large-scale asset purchases, pledging to buy $40 billion a month in mortgage-backed securities as Chairman Ben S. Bernanke called housing “one of the missing pistons in the engine.”
The Federal Open Market Committee, in its last scheduled meeting before the presidential election, repeated yesterday that it would press on with the asset purchases until the labor market improves “substantially.”
Housing’s improvement has extended to some companies like swimming-pool product supplier Pool Corp. of Covington, Louisiana.
“We do see that creeping up gradually over time,” Manuel Perez de la Mesa, the company’s president and chief executive officer, said about new pool construction on an Oct. 18 earnings call.
“People have to view their homes as an investment and not as an expense,” he said. “Once they view that home as an investment, they’ll be more willing to invest in their home whether it’d be in resurfacing the pool, replacing the equipment or again, bigger leap of faith, putting in a new pool.”