Special to Realty/Builder Connection
Amid rumors of interest rate hikes and poor performance of the job market, Fannie Mae Vice President and chief economist David Berson said overall the economy is strong.
Berson addressed Fannie Mae’s North Florida Partnership Office Advisory Board meeting last month at the Adam’s Mark Hotel. Berson’s topic was housing and the economy.
“Over the past half year, most of the economic data have shown an economy that has been growing strongly,” he said. “The manufacturing sector is making an especially strong comeback, and inventory spending finally appears to be rising.”
Berson admitted the job market has shown slower job growth than in any year since 1938.
“The March payroll employment report finally showed some significant job gains, the strongest in four years,” Berson said. “The big question now is whether or not above-trend job growth will continue. More recent data have suggested that the pickup in employment should be sustained going forward.”
Berson manages Fannie Mae’s Economics Department and is a senior participant in Fannie Mae’s strategic planning process.
Prior to joining Fannie Mae, Berson served as senior economist at the U.S. League of Savings Institutions, chief financial economist at Wharton Econometrics, visiting scholar at the Federal Reserve Bank of Kansas City, and assistant professor of economics at Claremont McKenna College and Claremont Graduate School.
He has also been an instructor in the Business School at the University of Michigan and in the Economics Department at Villanova University. His government experience has included staff economist on the Council of Economic Advisers, as well as positions in the Office of Tax Analysis at the Treasury Department and in the Office of the Special Trade Representative. Berson has a Ph.D. from the University of Michigan.
Berson said housing activity remains robust and that February home sales showed a rebound despite worse-than-normal weather. He credited lower mortgage rates and a stronger economic activity for the boost in housing demand. Berson cited the following statistics:
• New-home sales rose to the third highest level ever in February, up to 1.16 million units, almost 25 percent above the same period in 2003.
• Existing-home sales climbed to a 6.12 million-unit pace in February, the first gain in three months. This pace was nearly 6 percent higher than that in the same month in 2003.
• Total housing starts fell again to 1.86 million units in February, the lowest level since last August. The pickup in new sales may presage a rise in single-family starts in coming months.
Greg Matovina, the Northeast Florida Builders Association’s president, agreed with Berson’s assessment of the market in Northeast Florida.
“We have not seen a slowdown here,” Matovina said. “Our relatively low inventory of residential housing product indicates a very strong demand for new homes. Conditions continue to favor a strong residential construction industry.”
Berson also said that even though interest rates most likely will start moving up sometime this year, housing activity will remain strong.
Matovina said Berson’s report is good news for all segments of the housing market.
“Even with an increase in the cost of a new home, a strong economy and a healthy supply of houses make it possible for more people to enjoy the benefits of homeownership,” Matovina said. “Homeownership is at an all-time high with more than 68 percent of Americans owning their own homes. Our goals continue to be getting people into a home, keeping them in their homes and increasing the supply of housing.”