Home Builder Confidence Hits All-Time Record

 Building or Rebuilding May Be An Option to the Residential Housing Shortage

The article below explains the surge in vacant land purchases and the demand for distressed properties. Buyers are finding their way around the housing shortage in our area by looking for land and are taking out Rehab loans in order to make a distressed home into the home of their dreams. This also lends to builders counting on quick turnarounds due to the shortage of single family homes. Most new listings (properly priced to the market) are under contract within 10 days of posting on the local MLS.

SEP 24, 2020 — by Janki Patel

HOME BUILDER CONFIDENCE HITS ALL-TIME RECORD

Last week, the National Association of Home Builders (NAHB) reported their Housing Market Index (HMI) hit an all-time high in the 35-year history of the series with a score of 83. The index gauges builder perceptions of current single-family home sales and sale expectations for the next six months, as well as the traffic of prospective buyers of new homes.

As the following chart shows, confidence dropped dramatically when stay-in-place orders were originally mandated earlier this year. Since then, it has soared back.

Looking at the three-month moving averages for HMI scores, confidence increased in every region of the country:

• The Northeast increased 11 points to 76
• The Midwest jumped 9 points to 72
• The South rose 8 points to 79
• The West increased 7 points to 85

CONFIDENCE IS VALIDATED BY THE NUMBERS

This confidence is definitely warranted. According to a recent NAHB report, single-family housing starts increased 4.1% to a 1.02 million annual rate, and single-family permits increased 6% to a 1.04 million unit rate, meaning newly constructed homes are on the rise.

A separate report from the Mortgage Bankers Association (MBA) shows mortgage applications for new home purchases increased by 33.3% compared to a year ago. Joel Kan, Associate Vice President of Economic and Industry Forecasting at MBA, commented on the numbers:

“The housing market continued to exceed expectations in August, as housing demand for new homes stayed strong and the job market continued to recover…The new home market has maintained its path of recovery throughout the summer, and record-low mortgage rates and households seeking more space will likely continue to drive demand into the fall.”

BOTTOM LINE

If you’re thinking about putting your house on the market but are afraid you may not find a home to buy, let’s connect to discuss new construction opportunities in our area.

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