Archive for the ‘Homebuilders’ Category

Comments Off on Single-Family Housing Starts Fell In January, Despite What The Headlines May Have Told You

Single-Family Housing Starts Fell In January, Despite What The Headlines May Have Told You


2011
02.17

Housing starts September 2008 - August 2010Annualized 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 Scottsdale 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.

Comments Off on Home Builders Report Higher Sales Levels In January

Home Builders Report Higher Sales Levels In January


2011
02.16

NAHB HMI Index 2000-2011

Homebuilder confidence in the market for newly-built, single family homes appears stable as the spring buying season gets underway in Mesa.

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 AZ across , 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.

Comments Off on Home Builders Slowed By Economy, But Seeing More Foot Traffic

Home Builders Slowed By Economy, But Seeing More Foot Traffic


2011
01.19

National Association of Home Builders Housing Market Index (Nov 2009-Dec 2010)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:

  1. How would you rate market conditions for sales of new homes today?
  2. How would you rate market conditions for sales of new homes 6 months from now?
  3. 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 new homes in Phoenix , this data may foretell of more bidding wars in the months ahead.

More active buyers means more competition for homes. It may also mean 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.

Comments Off on Why Builder Confidence Surveys Matter To Buyers Of New Homes

Why Builder Confidence Surveys Matter To Buyers Of New Homes


2010
12.17

National Association of Home Builders Housing Market Index (Nov 2009-Dec 2010)Home builder confidence is holding firm this month, according to the National Association of Home Builders.

The group’s monthly Housing Market Index survey posted 16 for December. That’s the same value as from November. It’s also equal to this 2010’s average HMI reading.

HMI is scored on a scale of 1-100, and is a composite of 3 separate home builder surveys measuring single-family sales; projected single-family sales over the next six months; and prospective buyer foot traffic.

The results of the 3 surveys were as follows:

  • Single-Family Sales : 16 (unchanged from November)
  • Projected Single-Family Sales : 25 (unchanged from November)
  • Prospective Buyer Foot Traffic : 11 (from 12 in November)

Values of 50 or better indicate favorable conditions for home builders. Values below 50 indicate unfavorable conditions.

In other words, although improving, conditions for home builders remain less from excellent. Home buyers in Mesa can use this to their advantage. When builders feel pressure from the market, they’re more likely to offer discounts.

On the other hand, job growth is returning, the economy is expanding, and mortgage rates are rising. These 3 factors are thought to boost housing markets. So, despite an unfavorable HMI reading, home builders might still less willing to “make a deal”; holding out for a better 2011.

November’s strong Housing Starts data supports that line of thinking.

If you’re buying a newly-built home , or expect to buy sometime in 2011, keep an eye on home builder sentiment surveys. The better the builders feel, the more you may be asked to pay to buy your next home.

Comments Off on Homebuilders Expect A Surge In New Home Sales

Homebuilders Expect A Surge In New Home Sales


2010
11.17

NAHB Housing Market Index November 2008-2010Homebuilder 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 in AZ and around the country, asking them to report on their business.

The survey is 3 questions:

  1. How are market conditions today?
  2. How do market conditions look 6 months from now?
  3. 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 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 in Scottsdale , 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.

Comments Off on As Buyer Foot Traffic Rises, So Does Homebuilder Confidence

As Buyer Foot Traffic Rises, So Does Homebuilder Confidence


2010
10.19

NAHB Housing Market Index October 2008-2010

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 Scottsdale market for newly-built homes. This is because its value is a composite of three survey questions:

  1. How are market conditions today?
  2. How do market conditions look 6 months from now?
  3. 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 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.

Comments Off on As Homebuilder Confidence Stagnates, Deals Abound

As Homebuilder Confidence Stagnates, Deals Abound


2010
09.30

Housing Market Index (2000-2010)

Home builder confidence held firm this month, according to the National Association of Home Builders’ monthly Housing Market Index. September’s reading of 13 equaled a 17-month low.

The HMI is on a 1-100 scale. A value of 50 or better indicates “favorable conditions” for home builders.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys which measures current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

None of the 3 September surveys improved from August:

  • Single-Family Sales : 13 (unchanged from August)
  • Projected Single-Family Sales : 18 (unchanged from August)
  • Buyer Foot Traffic : 9 (from 10 in August)

Builder confidence is lower in 2010 than at any point in recorded history.

 

For home buyers in Phoenix , the drop in sentiment creates opportunity. With builders feeling “down”, there’s a greater likelihood for discounts and free upgrades. It can mean more house for your home buying money.

Plus, with the supply of both new and existing homes elevated, and foreclosures still hitting the market, conditions aren’t soon likely to change.

Then, couple all that with all-time low mortgage rates and monthly housing payments look as affordable as ever.

If your plans call for buying a home in the early part of 2011, you may want to consider moving up your time frame. Today’s market looks ripe for a good deal.

Comments Off on Home Builder Confidence Falls Again; Home Buyers Gain Leverage?

Home Builder Confidence Falls Again; Home Buyers Gain Leverage?


2010
08.17

NAHB Housing Market Index August 2008-2010Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.

After reaching a 3-year high just 90 days ago, the National Association of Homebuilders’ Housing Market Index is now at a multi-year low. It’s since dropped by almost half.

As an economic indicator, the HMI’s goal is to “take the pulse of the single-family housing market”. It surveys home builders across the country and asks them to report on 3 facets of their business:

  1. How are market conditions today?
  2. How do market conditions look 6 months from now?
  3. How is the prospective traffic of new buyers for new homes?

Responses are then collated, weighted, and presented as the Housing Market Index.

The August HMI reading of 13 is the lowest since March 2009.

Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.

Builders report watching foot traffic stagnate and most likely won’t want to be stuck with excess inventory into the fall and winter months.  For home buyers in Scottsdale , drops in builder confidence like this can be an excellent negotiation tool.

Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower. 

This one-two combination can make for cheaper homes with cheaper monthly payments.