In the one bright spot in an otherwise gloomy economy, housing starts as well as resale of homes has been climbing at its fastest pace in almost three years.
According to the Commerce Department, groundbreaking on new homes jumped 6.9 percent in June, to a seasonally adjusted rate of 760,000 new units. That is the highest number of new housing units begun since October, 2008.
"Housing is clearly in recovery mode, although the sector is much less important than it used to be," said Jim O'Sullivan, an economist at High Frequency Economics in Valhalla, New York.
It has been about six years since the beginning of the real estate crisis. Although there is still a surplus of unsold homes the pick-up of the real estate market has given a ray of hope to the eventual recovery of the rest of the economy. However, the effect the housing market has on the general economy is not as great as it used to be because housing accounts for a smaller share of the economy as a whole. So the ray of hope is simply that, just a ray.
The Mortgage Bankers Association announced on Wednesday that applications for home mortgages climbed last week as more people are refinancing their homes at the new, record-low rates for 30-year mortgages.
"Housing continues to be the one sector of the U.S. economy that is outperforming expectations," said Michael Gapen an economist at Barclays in New York.
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