Economists: housing market booming, bank loans still difficult to get

According to reports, the US housing market is recovering at a rate faster than previously predicted. Homebuilders are building new homes at a faster rate and of course, banks are getting multiple loan applications every day. Brokers and realtors are getting piles of paperwork that need to be done while prospective home buyers are scouring the internet for their dream homes. However, everything is not good news since those at the bottom of the financial chain are still struggling with their mortgages, threats of foreclosure and uneven access to loans.

An economist for IHS Global Insight said that the US housing boom began in December with 954,000 new homes. The number is said to be the highest recorded in the past four years. It actually came as a surprise as earlier reports only expected about 890,000 new homes to be made.

Good Health of the Housing Market Affects Economy

The chief economist for High Frequency Economics explained that there are several reasons for the unexpected good health of the US housing market. Better weather is said to be one of these reasons because the surge of building was noted after the onslaught of hurricane Sandy. Note that the 954,000 new homes also included those that have been reconstructed out of debris.

But the number of grounds broken is not the only proof of the booming of the US housing market. There’s also the increase in the application and issuance of home building permits. Accordingly, these permits have been on the rise since July of 2008 and the number hasn’t dipped in any month since then. There is reason to believe that the increase in permits could have been a result of the availability of new homes. Hence, homebuilders believe that their strategy is a good factor to drive positive financial encouragement.

Banks Get More Mortgages Signed

With the strong response from home buyers, banks have seen an increase in mortgages signed. The Bank of America has seen a 42% increase in mortgages signed in 2012 alone. Meanwhile, JP Morgan has seen earnings amounting to $418 million, which is a great leap of improvement from the $269m loss experienced in 2011. Home loans have also gone up since the last three months.

These positive reports only go to show that there is a lot of money in the housing market right now. Several sectors of the economy are reaping its benefits. However, be aware that if you’re a would-be homebuyer, you will still have to look closely at your credit report because getting loans would still be as tedious as it was three years ago. On that note, nothing much has changed there.