Existing-home sales, tabulated when a contract closes, have recovered since reaching a 13-year low of 4.11 million in 2008. The market peaked at a record 7.08 million in 2005. Resales accounted for about 93% of the residential market in 2012.
The strength in demand has bolstered demand for new properties as well. PulteGroup, Lennar Corp. and D.R. Horton Inc., the top three U.S. homebuilders by market value, said orders rose in the most recently reported quarter.
A report yesterday from the Commerce Department showed single-family home starts increased in January to the highest level since July 2008. Total housing starts dropped to an 890,000 rate, restrained by a drop in construction of multifamily dwellings.
This year will probably show “at least 950,000 housing starts, probably closer to 1 million, based upon what we have seen so far in terms of order rates as well as permitting activity,” Gregory Hayes, chief financial officer at United Technologies Corp., said at a Feb. 7 conference. The Hartford, Connecticut-based company’s products include Carrier air conditioners and Otis elevators.
“If housing starts really do pick up as we expect and the economy picks up as we expect, I think what you’ll see is pretty good growth in the residential business” that includes Carrier air conditioners, Hayes said.
Property purchases are more affordable for those who can get credit. The average fixed rate on a 30-year loan held at 3.56% in the week ended Feb. 21, down from 3.95% a year ago, according to McLean, Virginia-based Freddie Mac.
Delinquencies, while still a hurdle to the industry’s rebound, continue to wane. Foreclosure filings fell 28% in January from a year earlier to the lowest level since April 2007, as a new California law slowed first-time defaults in the most-populous state, according to RealtyTrac, an Irvine, California-based data provider.