New home sales numbers were released this morning. They’re more than double what was expected, jumping 3.4%, or 1.047 units sold. Peter Morici, a former chief economist for the U.S. International Trade Commission, was on “Morning Call,” and he’s saying this is “very good news for the economy.”
According to Morici, the numbers show that the housing correction will be shallow, and he expects new home construction to rebound in the second and third quarters of 2007. He’s also confident that the economy will grow at a moderate rate next year.
Maria Fiorini Ramirez, who The Wall Street Journal named the top inflation forecaster from 2001-2004, also spoke with Michelle Caruso-Cabrera this morning. The most important thing to take from the numbers, she says, is that “the worst of housing is known to the marketplace.” With inventory being managed well and most speculative building on the decline, “I think the worst is behind us, not ahead of us,” she says.
After such a meteoric rise in the housing market, most analysts were predicting a bursting bubble and a woeful impact on the economy. Ramirez says the Federal Reserve can rest a bit easier now that one of its biggest concerns seems to have settled down.