Oct. 17 - A blowout report on the U.S. housing market is building the case that the economic recovery is on a firm foundation. Bobbi Rebell reports.
PLEASE NOTE: THIS EDIT CONTAINS 4:3 MATERIAL The housing sector recovery continues to build. Groundbreaking on new U.S. homes surged in September to its fastest pace in more than 4 years And that could be a game changer for the U.S. economy, according to IHS Insights' Patrick Newport. SOUNDBITE: PATRICK NEWPORT, U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "When housing takes off it can make a big difference in the economy; it's only a matter of when that is going to happen." Economists estimate that for every new house built- at least three new jobs are created. Newport estimates that could translate into 3-4 million new jobs in the next few years. And he says beyond the recent Fed plan to buy mortgage backed securities every month- the housing market may have another ace in the hole: SOUNDBITE: PATRICK NEWPORT, U.S. ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SAYING: "We've been building at too-low rates over the last 4 years partly because we overbuilt during the boom years and partly because we fell into a great recession and there was a lot of sharing of households. But the demographic is starting to kick in. We are growing by 3 million a year; at some point we are going to have to ramp up on the housing starts and that may be happening right now." Even the banks are taking notice. On Bank of America's earnings call, their Chief Financial Officer Bruce Thomson said the housing market is clearly beginning to turn a corner. But there are some variables to keep in mind according to UBS home-builder analyst David Goldberg: SOUNDBITE: DAVID GOLDBERG, HOME-BUILDER ANALYST, UBS (ENGLISH) SAYING: "I think some of what we saw was seasonal adjustment. Some of it was a little pull forward in demand because weather was really good in September in the Midwest, in the Mid-Atlantic; so you had probably some pull forward in terms of the overall activity. That said things are definitely getting better in housing." But Goldberg cautions the data are volatile. Bobbi Rebell, Reuters.