Housing shares dependent on economy easing but not falling GlobeInvestor
The pace of U.S. economic growth may prove to be critical for shares of homebuilders, which have climbed sharply as spring approaches. An easing economy that allows for lower interest rates supports an optimistic outlook for the industry, investors say, but any hints of a sustained downturn could sink shares.
Yet a survey from the National Association of Home Builders showed that homebuilder confidence increased in February, and the latest housing starts data released by the Commerce Department on Friday showed that homebuilding increased more than expected in January. Elevated home prices have been one of the biggest hurdles for the industry, both investors and analysts say. Rising mortgage rates, which climbed past 5 per cent last fall, exacerbated concerns about affordability.
The 2017 U.S. federal tax overhaul capped deductions for state and local taxes, which raised concerns that people would be dissuaded from buying homes in high-tax states such as New York and California. But a slowdown in those markets may be offset by an uptick in other regional markets.
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