The housing rebound is ricocheting into other markets in the U.S. economy, and shows signs that this growth spurt will likely continue through 2013 and beyond, Bloomberg reported Monday.

Climbing home prices are causing household wealth to rise, increasing the purchasing power of consumers. Declining mortgage delinquencies and foreclosures are supporting bank balance sheets, providing them with more leeway to lend. Meanwhile, revenue from property taxes is bolstering state and local governments’ financing, which in turn alleviates pressure on them to cut budgets.

“The housing recovery will kick into a higher gear as the year progresses,” said Mark Zandi, chief economist in West Chester, Pennsylvania, for Moody’s Analytics Inc. “We’re going to get a lot of juice from the channels” through which it affects other parts of the economy.

Impending ImpactChanging Real Estate Market Image

The disseminating effect of this upwardly mobile housing market trend makes it easier for the nation’s economy to keep on growing, regardless of looming tax increases and spending cuts from the federal government. Rising residential real estate construction and its inherent economic impacts will lift gross domestic product by about 0.75 percentage point this year, offsetting much of the drag from the fiscal squeeze, according to Zandi. He sees GDP growing at about 2 percent again this year.

Factory Orders

In recent report results regarding homes and factory orders released by the Commerce Department, the data showed that factory orders in the U.S. did not climb as high as the December forecast, which the Commerce Department says reflects a decline in non-durable goods that partly countered gains in computers and construction equipment.

Bookings climbed 1.8 percent after a revised 0.3 percent drop in November that was initially reported as unchanged, the agency said. The Bloomberg survey median called for a 2.3 percent gain. Demand for durable goods increased 4.3 percent, little changed from a 4.6 percent gain estimated last week, while non-durables dropped 0.3 percent on declines in petroleum and tobacco.

Perhaps the best reason for optimism in the housing market is its history of lifting the proverbial thumb off the nation’s economy a recession, lightening its load as it fights the uphill battle toward recovery.

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This is filed under National Markets.


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