Housing is the economy’s Energizer bunny: It keeps going and going
![<i>Micah Green/Bloomberg/Getty Images</i><br/>A](https://abc17news.b-cdn.net/abc17news.com/2021/10/hypatia-h_d376c69581c128e356cdf5750f1f5555-h_07db205bb9beaabd1f61e3292a8fda62-300-scaled.jpg)
A "Sold" sign in the window of a home under construction in the Ellerbe Estates subdivision in Dalzell
By Paul R. La Monica, CNN Business
The housing market is showing no significant signs of slowing, despite some concerns that prices may be close to peaking as mortgage rates climb.
Housing starts in September were up from a year ago, while existing home sales topped economists’ forecasts and rose from August levels.
Even as some sectors of the economy remain muted, the housing boom keeps going and going. That’s obviously good for builders, but it could also be great news for the broader economy and stock market — especially since this strength appears to be nationwide.
Several regional districts of the Federal Reserve noted robust housing market data when the Fed released its Beige Book economic report earlier this week.
The New York Fed noted that “housing markets have been steady to slightly stronger, on balance, in recent weeks” and that “sales activity picked up noticeably across New York City, far exceeding prepandemic levels.
In Atlanta, the Fed said “demand for housing was robust, inventories declined, and home prices rose” while the Chicago Fed said “residential mortgage activity continued to be strong” and that there were “all-time low delinquency rates” in the housing market.
Investors in housing-related companies are upbeat, too. Shares of retail giants Home Depot and Lowe’s are up 36% and 42% this year respectively and are each trading at all-time highs. The SPDR S&P Homebuilders exchange-traded fund has surged 35% in 2021.
Meanwhile, corporate executives remain confident, with JPMorgan Chase chief financial officer Jeremy Barnum saying on an earnings call last week that he’s not worried a rise in mortgage rates will slow down demand for purchases and new home loans.
“The impact of…higher rates shouldn’t be a source of major concern for the housing market,” Barnum said, in response to a question from CNN Business.
Other business leaders also are dismissing worries that home sales may soon peak.
“Residential is still pretty hot. Remodeling activity is good. Housing starts are good,” said Mark Sheahan, CEO of Graco, which makes paint sprayers for home owners and contractors, on an earnings call Thursday.
“I don’t see any real negatives in the future. No storm clouds on the horizon, I would say, from our viewpoint,” Sheahan added.
Some executives noted the housing market is still playing catch up after years of more sluggish activity. Demographics are helping, too, as older millennials look to ditch the stereotype about living in their parents’ basement and start families of their own.
“Housing remained well below historical and structurally needed levels for over a decade. This is compounded by pent-up demand from millennials that we’re only now beginning to see,” said Whirlpool CEO Marc Robert Bitzer on an earnings call Friday.
Bitzer also noted that “interest rates remain at historically low levels” and “the housing market…will be a strength.”
Meanwhile many Americans, particularly those working in more white-collar services types of jobs, are still working from home. Some may never return to the office. That means more people are likely to shun smaller apartments for larger houses with ample home-office space.
“I think the work-from-home dynamic is going to stay in place,” said Peter Arvan, CEO of Pool Corp., a distributor of swimming pool supplies and other outdoor living products, on an earnings call Thursday. “The housing market is in good shape.”
The-CNN-Wire
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