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By Jason Stipp | 05-26-2010 02:08 PM

Housing Market Getting on Its Feet

Lower interest rates, better consumer confidence, and recent results at Toll Brothers suggest the homebuyer credit isn't the only thing underpinning better housing results.

Securities mentioned in this video
TOL Toll Brothers Inc

Jason Stipp: I'm Jason Stipp for Morningstar. We recently saw some better-than-expected existing and new home sales. Dare we think that we possibly could be seeing a turnaround in the housing market? Here with me to offer his take is Morningstar's Bob Johnson. He's associate director of economic analysis. Thanks for joining me, Bob.

Bob Johnson: Jason, nice to be here.

Stipp: I want to talk about the housing credit in a moment. But first of all, aside from the housing credit, what do you see out there that might be leading to some better-than-expected results on the home sales front?

Johnson: Sure. I'm seeing a number of things going on out there. One is interest rates are way down from where they've been. We're now back to kind of where we were all the way in December. And keep in mind, when you calculate the affordability of a home, one of the things is the interest rate that goes in there. And that rate has now fallen dramatically.

One of the fallouts of this whole European crisis is that everybody has come to the US as a safe haven, and that's driven the long-term or the 10-year Treasury Bond down in terms of rate, and that's how people price their mortgages. So now we've got mortgages well under 5% again on a 30-year mortgage.

Stipp: Now are we seeing that people are actually able to get loans? Because I know that that was a concern at one point. Even though the interest rates were low, not everyone was qualifying to get a mortgage.

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