May 4, 2009

Increased activity in the housing sector

According to private data released on Monday, more Americans signed contracts to buy homes in March than economists expected, bolstering hopes that low mortgage rates and cheap prices could be helping to stabilise the housing market.The number of people signing contracts to buy existing homes rose 3.2 per cent in March from the previous month, according to an index produced by the National Association of Realtors.However, the increased activity was concentrated in the south and west of the country, where the index rose 8.5 per cent and 3.9 per cent respectively. In the north-east and mid-west, it fell by 5.7 per cent and 1 per cent respectively.This increase in activity could be due to first-time buyers drawn in by some of the most affordable houses for 30 years.Lawrence Yun, chief economist at NAR, warned that it did not necessarily mean the housing market had bottomed: “We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around.”Many believe that this increase in the housing market will lead the economy out of recession.

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