News: US confidence returning as home sales ramp up
Business confidence levels in the U.S. house-building market were up for the fifth month in a row in February, rising from 25 to 29 on the NAHB/Wells Fargo Housing Market Index (HMI) released this week, as housing sales keep rising.
This is the highest level the index has reached for more than four years and “builder confidence has doubled since September as measured by the HMI,” NAHB Chairman Barry Rutenberg told OPP.
“Given the recent improvements in new home starts and the increasing number of markets included in the NAHB/First American Improving Markets Index, this consistency suggests that the housing market is moving toward more sustainable growth,” he added.
Rutenberg, who is a developer and builder based in Florida, also warned that the U.S. homes market remains “very fragile” with significant differences between different parts of the country.
According to NAHB Chief Economist David Crowe, “this is the longest period of sustained improvement we have seen in the HMI since 2007, which is encouraging.”
“However, it is important to remember that the HMI is still very low, and several factors continue to constrain the market. Foreclosures are still competing with new home sales, and many builders are seeing appraisals come in at less than the cost of construction. Additionally, prospective home buyers are finding it difficult to qualify for a mortgage.”
The NAHB/Wells Fargo Housing Market Index has been asking the U.S. property sector to rate their home sales expectations for the next six months as “good,” “fair” or “poor” for more than 20 years. The survey asks developers and builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more developers and builders view conditions as good than poor.
Each of the HMI’s three components improved for a fifth consecutive month in February. The component measuring traffic of prospective buyers rose from 21 to 22, and the component measuring sales expectations for the next six months increased from 29 to 34. The component measuring current sales rose from 25 to 30.
This newfound confidence has been backed up by RE/MAX’s latest housing report, saying that US Home sales in January rose by 3.4% compared to the level seen in January 2011.
For the seventh straight month, home sales remained higher than sales in the same month of the previous year. 20 of the 53 metro areas included in the survey saw double-digit jumps year-on-year, and 36 experienced higher sales than January 2011.
“This positive start to the year will hopefully set the tone for a continuing housing recovery that’s drawing home buyers with low interest rates and low prices”, said Margaret Kelly, CEO of RE/MAX LLC.
The median sales price paid in January was $129,306, down 3.4% from December. The median sales price has dropped on a year-over-year basis for the last 17 months. However, compare to last year, home prices were down only 0.8%, which signals a trend of much anticipated price stabilization.
Perhaps due to falling foreclosure numbers, month-to month inventories have now fallen for 19 consecutive months. For the month of January, the average inventory of homes for sale in the 53 surveyed metro areas dropped 4.2% from December and also dropped 24.1% from January 2011.
For homes sold in January, the average Days on Market was 103, which is 5 days higher than the 98-day average in December and 4 days higher than the average in January 2011. Only two months in 2011 saw a Days on Market average below 90: July and September both reported 88.
Source OPP
20/2/2012