Construction Numbers are Up
A telling sign of a healing market: builders worked on more new homes last month.
According to the Commerce Department, builders broke ground at a seasonally adjusted annual pace of 717,000 homes in April. That’s 2.6 percent more than the previous month, signalling that the battered housing market is slowly emerging out of the woods. Construction increased for single-family homes as well as apartment buildings.
The resurgence in demand comes at a time when the housing market is showing some slow recovery signs. For several quarters now, builders have had to compete with foreclosures and short sales that flooded the market, dragging down existing home prices. With the deeply discounted inventory hanging overhead, demand for new buildings plummeted. But, things seem to be slowly turning around.
Building permits, a gauge for future construction, climbed almost 2 percent for single-family homes, despite a decrease for apartment construction.
All the signs bode well for the future, despite the numbers being roughly half the pace of what’s considered to be a sign of a healthy market. According to the Associated Press, builders have grown more confident since last fall. One reason is that more people have expressed interest in buying a home, the AP said.
Gains in employment and attractive record low mortgage rates are expected to continue to boost demand for new homes. More demand means more construction, more employment, and a boost for the market’s recovery.
Real Estate Agents Seeing More Foot Traffic
There’s a buzz across the country about a spring awakening in the real estate market.
According to Investor’s Business Daily, although it’s too early to pop some champagne, real estate professionals are “cautiously upbeat” about the recent market trends. And here’s why: Sales are up. Foot traffic is on the rise, and prices seem to be finally stabilizing.
“Demand is up, and the psyche of the consumer is much better than it has been in years,” Ken Fears, an economist at the National Association of Realtors® told the IBD.
The publication interviewed real estate agents who said that they are “seeing a lot of buyers” coming into the market.
With employment numbers slowly trending upward, and the economy gradually gathering steam, there’s hope that consumer confidence will continue to grow and contribute to more home buying.
Housing Affordability Hits a Record High
It’s a good time to buy. The latest National Association of Home Builders/Wells Fargo Housing Opportunity Index says that housing affordability nationwide hit a new high for the second consecutive quarter. And interest rates continue to hover at the bottom.
According to the report, 77.5 percent of all new and previously occupied homes sold in the first quarter were affordable to families earning a national median income of $65,000. That’s almost 2 percent more than the previous record of 75.9 percent sold in the last quarter of 2011 that were affordable to median-income families.
“Homes in this year’s first quarter were more affordable than they have been at any time in more than 20 years, yet many potential sales are not happening because of overly tight lending conditions that are keeping hardworking families from obtaining a suitable mortgage,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) in a release. “Without this significant hurdle, the housing and economic recovery could be proceeding at a much stronger pace.”
The most affordable market in the first quarter was Indianapolis-Carmel, Ind. According to the Index, 95.8 percent of homes sold there were affordable to households earning the area’s median family income of $66,900. Other affordable markets were: Dayton, Ohio; Lakeland-Winter Haven, Fla.; Modesto, Calif.; Grand Rapids-Wyoming, Mich.; and Buffalo-Niagara Falls, N.Y.
The least affordable market was in New York-White Plains-Wayne, N.Y.- N.J. Only 31.5 percent of homes sold there in the first three months of this year were affordable to those earning the area’s median income of $68,200.