The month of August has finally brought in some hope for the housing sector in the US. The National Association of Home Builders (NAHB) sentiment index rose by two points this month, the highest since March 2007, thus triggering expectations of a possible recovery
The index, computed on the basis of response from 500 builders, has been on the up since October barring January. This trend signifies that years of stagnation may finally be on its way out. Although a reading below 50 is interpreted as negative, the rise is seen as a significant development.
The increase in sales this month can be attributed to reduced mortgage rates and a fall in the number of unsold homes. Construction activity is now taking place in full swing. More number of permits for single-family homes has been issued since March 2010. The rise in consumer interest is evident from the fact that sales of kitchen installations, paint, and bathroom accessories have gone up. Given the steady rise in prospective buyers NAHB expects sales to grow by leaps and bounds in the coming months.
But a lot depends on how the economy performs in the coming days. If economic growth slows down further and employment remains weak it could hit the housing sector growth. On the employment front, only 74,000 jobs were added in the last 3 months. Likewise, the second quarter saw the economy grow by only 1.5%.