Housing Starts are Up
Bolstered by a healing economy, falling mortgage rates, rising home prices and depleting inventory, homebuilders cranked up new home and apartment ?building construction in May. At a seasonally adjusted rate, housing starts jumped to 914,000, a 6.8 percent jump compared to April.
The latest numbers released by the Commerce Department are again an affirmation that recovery is underway. With the economy slowly gathering steam, the market is showing a much needed turnaround, thereby boosting builder and consumer confidence.
In April, construction permits, a sign of future building activity, surged, signalling the ensuing increase in housing starts. Single-family home starts increased 0.3 percent last month after two months of decline. That?s an indication that?more people are finally venturing out to buy homes and preferring to be owners rather than renters.
New Home Sales Jump
It?s not just home starts that are gaining momentum. Existing home sales, a key factor in boosting builder confidence, also shot up along with median home prices.
The increases again are a result of the improving job numbers and low mortgage rates, which have eased anxiety and encouraged homebuyers to dive into homebuying.
In May, sales of previously occupied homes jumped 4.2 percent to a seasonally adjusted annual rate of 5.18 million, according to the National Association of Realtors?. That?s the highest rate since November 2009, according to USA Today.
Although this is excellent news for builders, it may not be the same for buyers in the market. Inventory is getting tighter, and supplies are depleting with an increase in sales. This means there?s less choice and higher markups on units for sale. Compared to earlier months, homes sold faster in May. Last month, the median time on the market for all homes was 41 days; that?s down from 46 days in April.
With home sales rising and inventory depleting, prices for existing homes are also climbing. The median price for previously occupied homes was $208,000 in May, up 15.4 percent from last year.
Builder Confidence Soars
Builder sentiment in June increased to 52, the highest score in seven years, according to the National Association of Home Builders. A reading above 50 is considered the sign of a healthy market.
The last time the index was that high was in April 2006, just before the market collapsed. Other components of the index ? such as customer traffic, sales conditions, and builders? outlook for single-family home sales ? also increased to the highest levels in seven years.
Record low mortgage rates and steady job growth have helped accelerate home sales, thereby increasing builder confidence. As home sales increase, prices also increase, and there?s more demand for inventory.
The Spring home selling season has been a good one for many major homebuilders, who reported strong annual sales growth.
?Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,? David Crowe, the NAHB?s chief economist, said in a release.
Mortgage Rates Slump
Some good news for buyers, too. Mortgage rates this week dropped for the first time in seven weeks. But, rates are expected to surge again soon.?According to Freddie Mac, the rate on 30-year loans was 3.93 percent compared to 3.98 percent last week. The rate on the shorter-term 15-year loans decreased to 3.04 percent from 3.10 percent.
Source: http://www.realestate.com/advice/homebuilder-confidence-increases-along-with-new-home-sales-25914/
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