Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., said the U.S. housing market has made progress and still has a way to go in recovering.
“It’s coming back,” Buffett, 83, said during 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 Omaha, Nebraska-based 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 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 also has invested in some of the nation’s largest mortgage lenders, including Wells Fargo & Co. and Bank of America Corp.
Borrowing costs at near-record lows have helped stoke demand for homes and boost the U.S. economy. That trend cooled in recent months as expectations that the Federal Reserve would end its bond-buying program sent mortgage rates higher. The central bank maintained its purchases last month, saying it needs additional evidence of improvement in the economy.
Sales of new U.S. homes increased 7.9 percent to a 421,000 annualized 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.
Climbing rates have put pressure on banks’ mortgage operations and slowed refinancing. Wells Fargo has announced more than 5,700 job cuts since midyear. Bank of America has also eliminated staff at home-lending operations.
“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 “40 Chances: Finding Hope in a Hungry World.” The book describes 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.
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