By Lawrence Yun and Ken Fears
- The New York Times reviewed a new research paper by authors from Dartmouth and the University of Warwick in England that implies a rise in the homeownership rate is bad for the economy because fast rising homeownership was associated with much higher unemployment rate. The paper gave examples of several southern states with high unemployment rates as evidence.
- Economic vitality should be assessed not by the unemployment rate but by job growth. A state may have a very low unemployment rate yet have no job growth. What is needed for economic and income growth, in short an improving standard of living, is job growth – the variable this critique focuses on.
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Home buyers have emerged and home sales have been pushed higher. Existing home sales rose by 9 percent in 2012 and are higher still by another 9 percent in 2013 year-to-date. New home sales – always the more cyclical figure – increased 20 percent in 2012 and are up 5 percent in 2013 year-to-date. Many REALTORS® have indicated that sales transactions would be even higher if there were a greater inventory of homes.
While buying activity remains solidly higher, the nation’s homeownership rate continues to trend down. The latest homeownership rate of 65.0 percent in the first quarter of this year is the lowest since 1995. More home sales yet falling homeownership rate: what’s going on? Could it be the investors are eating up everything in sight?
In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses construction spending, the ISM index, ADP payroll figures, and mortgage purchase applications.