Putting aside the hype and high expectations, the government jobs report that just arrived signals a stronger economy on the verge of solid growth. The trend is in place and if Congress doesn’t do anything stupid, the trend should continue with increasing strength.
Employers hired more workers in February than in any month since May last year and the unemployment rate fell to a near two-year low, the strongest sign yet the recovery has become self-sustaining.
Assuming the jobs trend does continue, then the last piece of the picture puzzle is the housing market. Aside from the reality that median prices are still falling slightly in some regions, the fact is that homes are actually selling, while foreclosures are declining, which means the inventory is dropping. Like the jobs report, these are encouraging signs that this anchor around our neck is beginning to slip off.
Sales of existing U.S. homes moved upward again in January … Sales rose in all areas but the Northeast. Inventory fell 5.1 percent in January, to 3.38 million units for sale. At the current sales pace, there is a 7.6-month supply, down from an 8.2-month supply the month before. Inventory is now at its lowest point since December 2009.
So, we now have jobs coming back into the economy, and that is key to catalyzing the housing market. As I have said before, spring is the beginning of the real estate “season,” so watch for an uptick this spring. Remember, as the housing industry improves, even more jobs will come back into play. Still there are issues, and one of those is credit …
The uptrend in home sales is consistent with improvements in the economy and jobs … The extremely favorable housing affordability conditions are a big factor, but buyers have been constrained by unnecessarily tight credit.
Well, if the JP Morgan ads on the TV are an indication, this tight-credit issue seems to be resolving. When you add that to low mortgage rates, well, it is a recipe for relief from a long and tough illness in the housing market. The average rate on a 30-year loan slipped to 4.87 percent from 4.95 percent last week and the average rate on a 15-year fixed loan fell to 4.15 percent from 4.22 percent.
Now, if the government finally steps up and forces banks to reap the rewards of their malevolent and greedy behavior, well the picture could change even more quickly than I currently perceive.
U.S. banks received a proposal from state attorneys general and several federal agencies that could require them to reduce loan balances of troubled mortgage borrowers …
My days just keep getting brighter … Oh shoot! I forgot about that dang issue in the Middle East.
Trade in the day – Invest in your life
