Awakening Auto and Housing Demand in USA

According to the auto sales report in September, the U.S. sales of autos and light trucks have kept growing in an acceleration rate of 14.9 million units per year, reaching the highest record since March 2008. U.S. Department of Commerce also indicated that the new home sales increased 5.7% to 389,000-unit annual rate as the highest level since 2010. The profit growth in the auto and housing sectors will balance the drops in the U.S. exports and commercial investments.

Meanwhile, the S&P/Case-Shiller Home Prices Indices in August brought more good news. The home prices continued to grow in August and the growing momentum has kept gaining. By this August, the home prices have risen for five consecutive months at least 19 cities while the S&P/Case-Shiller Home Prices Indices in 20 cities have grown 2% among which the home prices of Phoenix saw the highest growth with a growth rate even exceeding 18%. 

The chief economist Patrick Newport of HIS Global Insight said, “The key factors to drive the growth of home prices are the super low interest rate and continued decreasing stock. Other factors include that investors take the chance of buying low price houses to sell, the employment rate is increasing, and people begin to consider realizing their dreams and so on.” After the economic crisis triggered by the real estate bubble in 2008, the market recovery three years after would enable the economy to grow again. The recent report of the Department of Commerce indicated that the prices of residential buildings increased 14.4% in Q3 and this result directly contributed to 0.3 percentage point of GDP growth in Q3. In addition, the GDP growth rate in Q3 was 2%, 0.7% higher than in Q2. Nearly half of the growth was attributed to the housing market.