Here is the skinny
By MARTIN CRUTSINGER
AP Economics Writer
Sales of new homes soared at a record pace in October in what could be a last hurrah for the booming housing market.
The Commerce Department said that sales of new single-family homes shot up by 13 percent last month, the biggest one-month gain in more than 12 years. The increase pushed sales to an all-time high seasonally adjusted annual rate of 1.42 million units.
The increase confounded analysts who had been predicting that new home sales would decline by 1.8 percent, reflecting continued increases in mortgage rates. It was possible that the unexpected surge reflected a final rush by buyers to get into the market before mortgage rates climb higher.
First of all... isn't it so great that the Al-Press writer starts off with pessimism about the housing market. And what is also great I can relate some of what shocks him to stuff I learned in school since coming to USF.
First of all the market forces that affect housing go back to the first law of real estate "Location, location, location"
The prices on housing are largely governed by "how is housing in -my- area." while some folks *DO* relocate the issues of housing price ( and overpricing) are governed by local and not national market forces. We could see a "southern-California" housing bubble burst but a national US housing bubble can only burst if their is a major economic shift that effects housing everywhere. And thanks to the Greenspan system of interest that simply isn't going to happen.
and second ( and most important) economic indicators aren't going down.
Yes fuel has pinched people somewhat but thanks to Bill Clinton and some of his policies the message has really penetrated every social strata. This is where my new favorite school of economics ( Rational Choice) comes into play. Their are other factors then strict economic factors at play. A lot of social factors ( people feel more like part of the system when they own property), Familial factors ( having a home to raise my kid) and even job factors ( do I want to live this close in a dump or drive from my own house. Trying to judge based solely on tangible factors ( income, fuel costs, intrest) won't work when the economy is essentially good.
So lets see some more hype on the housing bubble people so we can laugh at it