While home prices are rising, David Blitzer, Managing Director and Chairman of the index committee at S&P Dow Jones Indices says “housing is faltering, ” according to the BBC.
Housing prices increased twice the rate of inflation in 2014, up 4.5% over a year earlier, but David Blitzer doesn’t think this is an indication of strength in the housing sector, and told the BBC, “The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about a million, the economy was in a recession. The softness in housing is despite favourable conditions elsewhere in the economy: strong job growth, a declining unemployment rate, continued low interest rates and positive consumer confidence.”
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Luxury homebuilder Toll Brothers, however, beat earnings estimates and raised their forecasts for number of homes they expected to sell in 2015. Executive Chairman Robert Toll credited job creation with the purchase of new homes. Construction of homes rose by 18.7% and housing starts have been at 1 million for five straight months. Toll Brother’s net income rose 78%.