Home prices across the country are continuing to appreciate steadily. In some areas, the gains were much greater. And sales remain robust. New home sales will set a record, about 921,000, if they continue apace. Two factors are propping up the housing market.
Unemployment continues to hover near historic lows.
Lereah estimates that every 1 percentage-point drop qualifies 250,000 more families for mortgages. All those bidders are keeping demand well above supply. Nor is there a glut of new houses to bridge the gap, with speculative building no longer in vogue. Consequently, sale prices remain high. Mortgage rates may go even lower if the economy continues to cool and the Fed chief reaches yet again for his remedial scissors.