Archive for Homebuilders
Annualized Single-Family Housing Starts dropped 1 percent in January to 413,000 units nationwide, it’s lowest reading almost 2 years.
A “Housing Start” is defined as a home on which construction has started.
Now, if you had only seen the Housing Starts story in the headlines today, you wouldn’t have known that single-family starts fell at all. It’s because of how the story is being reported.
Most commonly, newspaper headlines are reading something similar to “Housing Starts Jump 14.6%” with the lead paragraph making mention that “housing starts are at their highest levels in 4 years.”
It’s a true statement, but it’s misleading, too.
This is because, despite the Census Bureau reporting Housing Starts by property type — single-family, multi-family, and apartments — the media often lumps them into a single data set.
It’s a categorization that helps investors in homebuilder stocks, but it does little for everyday Lake Geneva real estate home buyers. The huge majority of buyers aren’t buying multi-units or whole apartment buildings — they’re buying 1-unit homes.
Here’s how January’s Housing Starts broke down by type:
- Single-Family Homes: Down 4,000 units, or -1%
- 2-4 Unit Homes: Negligible change
- Apartment Buildings: Up 46,000 units, or +80%
Clearly, the surge in Housing Starts can be attributed to the rapid rise in the 5-unit-or-more sector. Single-Family Starts were weak, by comparison.
Even with all of this noted, however, we can’t even be certain that the January Housing Starts data is accurate anyway. A footnote in the government’s report shows that, although single-family starts are said to have decreased 1 percent, the data’s margin of error is ±8.6%.
This means that the true Single-Family Housing Starts reading may be anywhere from -9.6% to +7.6%. The data is throw-away. Housing Starts may have actually increased in January, but we won’t know until revisions are offered later this year.
It also means that with less building there are less properties going into the sales inventory. This is good news if you’re a home seller, but bad news if you’re a Lake Geneva real estate home buyer. However, Lake Geneva mortgage rates continue to move higher, and now is the time to take advantage before more of your purchasing power erodes.
Homebuilder confidence in the market for newly-built, single family homes appears stable as the spring buying season gets underway for Lake Geneva WI real estate.
The confidence reading is recorded and reported monthly by the National Association of Homebuilders. For the 4th straight month, the group’s Housing Market Index reads 16.
As a market indicator, Housing Market Index has been tracked for more than twenty years and reports on a 1-100 scale. A value of 50 or better indicates “favorable conditions” for home builders.
HMI hasn’t read higher than 50 since April 2006.
Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys measuring current single-family sales; projected single-family sales; and foot traffic of prospective buyers.
February’s surveys showed slight improvement as compared to January, overall.
- Single-Family Sales: 17 (+2 from from January)
- Projected Single-Family Sales: 25 (+1 from January)
- Buyer Foot Traffic: 12 (unchanged from January)
It’s notable that the current sales levels were higher in February, and that projected sales levels for the next 6 months are higher, too.
For home buyers Lake Geneva real estate, this month’s Housing Market Index reading may foreshadow tougher negotiations in the months ahead with builders. The likelihood of getting discounts and free upgrades may be diminished as builders see their respective sales levels grow, and as the economy expands.
Coupled with rising mortgage rates, home buyer purchasing power may never be as high as it is today.
Therefore, if your plans call for buying a newly-built home this year, think about moving up your time frame. Builder confidence appears to have bottomed. As it rises, so should home prices.
Homebuilder confidence held firm for the second straight month this month, according to the National Association of Home Builders.
The monthly Housing Market Index registered 16 out of a possible 100. January’s reading is three points higher than the 2010 low-point, set in September, and in-line with last year’s average reading.
According to the NAHB, the market for newly-built, single family homes remains relatively weak “following a below-expectations finish in 2010.” Builders expect a better 2011.
The Housing Market Index dates to 1985. It’s a composite of surveys which gauge the builders’ perceptions of the new home-buying market.
There are 3 surveys and they ask:
- How would you rate market conditions for sales of new homes today?
- How would you rate market conditions for sales of new homes 6 months from now?
- How would you rate the foot traffic of prospective buyers of new homes?
The answers are then collated and weighted, and used to produce the Housing Market Index.
In January, market conditions for current and future sales were deemed to be flat. Foot traffic is seen as increasing. For homebuyers of Lake Geneva real estate new homes, this data may foretell of more bidding wars in the months ahead.
More active buyers means more competition for homes. It may also means fewer concessions from builders as confidence starts rising.
If you’re in the market for a newly-built home, watching the Housing Market Index may be sensible. Each builder is different, of course, but as the overall market sentiment falls, buyers can be more likely to get “a deal.” That’s not the case once confidence is rising.
The HMI is plateaued. If it resumes rising later this year, expect new homes to get more costly.
Lake Geneva Real Estate Homebuilders Expect A Surge In New Home Sales
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Homebuilder confidence is higher for the third straight month this month.
According to the National Association of Home Builders/Wells Fargo Housing Market Index, a combination of shrinking new home inventory plus higher-quality foot traffic is boosting builder optimism.
November’s confidence reading of 16 is the highest since June 2010. The Housing Market Index is now above its 3-year trendline, too.
The purpose of the Housing Market Index is to measure “the pulse of the single-family housing market.” The survey is sent to home builders of Lake Geneva real estate and around the country, asking them to report on their business.
The survey is 3 questions:
- How are market conditions today?
- How do market conditions look 6 months from now?
- How is the prospective traffic of new buyers for new homes?
Responses are then collected, and seasonally-weighted.
It’s no surprise that builder confidence is rising. The sales of new homes spiked in September, and the jobs market is moving in the right direction. Low Lake Geneva mortgage rates help attract new buyers, too. Altogether, the outlook in the New Home market is as rosy as it’s been in months.
The downside for new home buyers of Lake Geneva real estate , though, is that, because of their improved outlook, builders may be unwilling to offer free upgrades or other discounts to buyers. Certainly not with sales are expected to return to “federal tax credit” levels, anyway.
Therefore, if you’re in the market for a new home, or expect to be “buying new” in early-2011, you may want to move up your time-frame. Not only are low mortgage rates not likely to last, but neither are low home prices.
As Buyer Foot Traffic Rises, So Does Lake Geneva Homebuilder Confidence
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As the “pulse of the single-family housing market,” the Housing Market Index is a monthly product of the National Association of Homebuilders. Its scores range from 1-100, with a reading a 50 or better suggesting “favorable conditions” for builders.
Because of its methodology, the Housing Market Index can offer excellent insight into the Lake Geneva real estate market for newly-built homes. This is because its value is a composite of three survey questions:
- How are market conditions today?
- How do market conditions look 6 months from now?
- How is the prospective traffic of new buyers for new homes?
Builder responses are collected, weighted, then presented as the Housing Market Index.
According to the NAHB, October’s HMI reading of 16 is its highest value in 5 months. The uptick hints that the market for newly-built homes may rebound more quickly that this summer’s weak new homes sales figures would otherwise suggest.
You’ll remember that, between April and August, the number of new homes sold per month fell by 30 percent and the available, new home inventory climbed 2.3 months.
This month, though, builders report much better foot traffic and, as a result, have raised their expectations for the next six months of sales. Low Lake Geneva mortgage rates are likely aiding the optimism, too.
As compared to 1 year ago, average, 30-year fixed mortgage rates are lower by 0.75 percent, a payment savings of $45 per $100,000 borrowed.