Housing’s Comeback Starting to Boost Economy

While it’s clearly too early to claim that the U.S. housing market has recovered from the doldrums of the last five years, there are some encouraging signs trickling in. And, Kate Linebaugh and James Hagerty (Wall St. Journal) report that some of that recovery is starting to affect corporate bottom lines:

Companies that sell power tools, air conditioners, carpet fibers, furniture and cement mixers are reporting stronger sales for the fourth quarter, providing further evidence that a turnaround in the housing market is taking hold.

The results add to data on home construction and pricing that indicate a bottom may have been reached after the sector’s long slide. While the incoming data continue to be mixed, evidence that Americans are spending more to build and refurbish homes is raising executives’ confidence that the housing market will continue to improve and help fuel the broader economy.

The story goes on to point out several large companies as examples of those which are benefitting from a housing recovery. The strength of their corporate balance sheets are supporting evidence of the improvement in home prices and construction.

The results follow a string of encouraging data on the housing market last year. Sales of existing U.S. homes rose to their highest annual level in five years in 2012 and registered their largest annual jump since 2004, according to the National Association of Realtors. Home construction, meanwhile, rose 12% in December and finished the year with the most new homes started since 2008. For all of 2012, 780,000 new homes were started, a 28% increase from the year earlier. Remodeling activity is also showing improvement, according to the Joint Center for Housing Studies of Harvard University.

Read the full article here (requires subscription to the WSJ online.)