The housing market has begun a recovery that will add fuel to the economy by next year, says Mark Zandi, chief economist for Moody’s Analytics.
Existing home sales rose 2.3 percent in July from June, and the median price of an existing home soared 9.4 percent from a year earlier, according to the National Association of Realtors.
Meanwhile, luxury homebuilder Toll Brothers reported stronger-than-expected earnings for its latest quarter Tuesday.
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“While housing is still very weak, it’s improving in terms of sales, in terms of construction — thus to your better numbers from Toll Brothers — and house prices have risen quite strongly,” Zandi tells Yahoo.
"Everything is moving north for the housing market."
Inventories are very lean, particularly for new homes, he says. So the sales increase will quickly lead to new construction, which is crucial for economic growth.
"Housing has gone from a big negative to neutral for the economy,” Zandi says.
"By this time next year it will be a plus, and two years from now a big plus and one of the reasons the economy will be growing much more quickly than many think in 2014 and particularly 2015."
Other economists express cautious optimism about the home market.
"The housing sector has turned a corner, and demand will continue to improve," Michelle Girard, an economist at Royal Bank of Scotland, tells Reuters. "The data also underscores the fact that improvement will be gradual."
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