CNBC: 2015 Will be Perfect Storm for Housing Recovery

Strong economic growth and low interest rates will create the perfect economic mix for a strong housing market in 2015, CNBC predicts in a recent article.

Evaluating the periods since 1980 when GDP was above 2%, yet the 10-year Treasury yield remained under 2.5%, CNBC found there has been about one year or four quarters of time when both these conditions were met and homebuilder stocks were the standouts among stocks in the S&P 500.

Housing stocks have “been unexciting and dull the past two years,” wrote Carter Worth, chief market technician for Sterne Agee, in a note to clients cited by CNBC. “We believe many homebuilding/home furnishing/building product stocks are about to come to life.”

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Masco, which makes faucets, cabinets and windows, posted an 8.4% gain, on average, data show.

The yield on the 10-year Treasury was most recently at 2.2%, down from near 3% to start 2014.

“A revision of third-quarter GDP last week showed that growth was a monster 5%,” CNBC says. “Economists subsequently raised their expectations for 2015.”

Read the article here.

Written by Cassandra Dowell

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  • How well the builders’ stocks do is not necessarily indicative of how the housing market is doing. The economics of housing are local. Some areas still have large inventories of existing homes for sale and those inventories will have to drop significantly before any builder would feel comfortable incurring the cost of land, soft costs, parks, schools and general project improvements. In other areas such inventories are low with the result that builders are looking for consumer demand. In some areas there is an overbuild of spec homes and other new construction.

    It will be a while before the nation as a whole will be at new home construction equilibrium.

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