Berkshire's Warren Buffett says US housing market 'coming back'
Housing sector improving but billionaire thinks equilibrium point has yet to be reached
Business magnate Warren Buffett says the US housing market has made progress but has not yet made a full recovery.
"It's coming back," the billionaire chairman and chief executive officer of Berkshire Hathaway said at an event at the New York Public Library.
"Pricing is better in almost all markets by a reasonable percentage from a few years ago. Housing starts are up somewhat. They still are not where I would regard as an equilibrium point, where they match household formation."
A rebounding housing market has helped Berkshire's subsidiaries that make carpet, bricks, insulation and houses. Some of those businesses have expanded in recent years through acquisitions as the industry recovers from the worst slump in seven decades.
Buffett, 83, has been predicting a real estate revival for years and positioning his company to benefit from it. He said in early 2010 that the turnaround would probably begin "within a year or so". While that call proved wrong, he has since reiterated that the industry would rebound because of increasing population and limited supply.
Berkshire has also invested in some of the nation's largest mortgage lenders, including Wells Fargo and Bank of America.
Borrowing costs at near-record lows have helped stoke demand for homes and boost the US economy. Mortgage rates fell to a four-month low after a weaker-than-expected jobs report drove investors to the safety of the government bonds that guide borrowing costs. The average rate for a 30-year fixed mortgage dropped to 4.15 per cent on Monday from 4.29 per cent the week before.
Sales of new US homes increased 7.9 per cent to a 421,000 annualised pace in August, figures from the Commerce Department showed last month. In July, the rate was 390,000. The two-month period was the weakest so far this year.
"The country has made significant progress since the fall of 2009," Buffett said at the event. "This economy was hit in 2008 by something that never happened in my lifetime except for when I was one or two years of age."
Buffett appeared alongside his son and grandson, both named Howard, to promote a book describing lessons the billionaire's son learned from his years working to improve food security around the world. It was written with Buffett's grandson and includes a foreword by the Berkshire chairman.