Real-estate activity is being stoked by cheaper borrowing costs and an improving labor market. The average rate for a 30- year fixed mortgage fell to 3.41% in the week ended April 18, the third consecutive drop, according to Freddie Mac. The rate declined to a record low of 3.31% in November.
Higher home prices have also boosted household wealth. Property values rose 10.2% in the 12 months through February, the biggest gain in almost seven years, according to Irvine, California-based CoreLogic Inc.
Builders are responding by stepping up construction, providing a boost for the expansion. They broke ground on new homes in March at the fastest pace in almost five years, the Commerce Department said April 16.
Contacts in most districts of the Federal Reserve system said “residential and commercial real estate improved markedly” with rising property values and demand for home loans that was “steady to slightly up,” according to its Beige Book business survey, which covers the period from late February to early April.
The strength in housing is spilling over into other parts of the economy such as manufacturing.
“We’re encouraged by the sustained improvement in housing sales, new home construction, rising housing prices, reduced inventories, historically low mortgage rates, and the best housing affordability in years, all of which combined to create a positive environment for our company and our industry,” Paul Toms, chief executive officer at Martinsville, Virginia-based furniture maker Hooker Furniture Corp., said on an April 15 earnings call.