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Real Estate Blog & Resources

Homebuilders' Confidence Levels Continue to Rise

Home builders are gaining more confidence in the market for newly built, single-family homes. The National Housing Association of Home Builders/Wells Fargo Housing Market Index indicated builder confidence rose five points to reach 59 for the month of June.

"Builders are reporting more serious and committed buyers at their job sites and this is reflected in recent government data showing that new-home sales and single-family construction are gaining momentum," said NAHB Chairman Tom Woods.

According to the index, all three components saw significant gains for the month. Current sales surged seven points to hit 65, sales expectations grew by six points to reach 69, while buyer traffic increased by five points to rest at 44. Collectively, these numbers are at their highest levels since the last quarter of 2005.

NAHB Chief Economist David Crowe said this indicates builders have a growing confidence that the market will continue to strengthen during the rest of the year.

"At the same time, builders remain sensitive to consumers' ability to buy a new home," Crowe noted.

Factors bolstering the confidence
Several factors have aligned to create this boost in builders' confidence levels. Home prices are rising. According to the latest S&P/Case-Shiller home price Indices, home values rose 5 percent year-over-year in the both the 20- and 10-City composites. Meanwhile, mortgage rates dropped from their seven-month high, HousingWire reported. The 30-year fixed-rate mortgage average declined by 0.04 percent to settle in at 4 percent on the week ending June 19. This represents a 0.17 percent drop year over year. As mortgage prices decrease and home values rise, more people will be interested in buying a house or land to build a house.

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June saw a 30 percent increase in year-over-year new home construction.

Following May’s revised rate of 1,069,000 new homes, June saw this number jump 9.8 percent to reach 1,174,000 new privately-owned housing starts, representing a 26.6 percent surge year over year, according to the U.S. Census Bureau. Builders throughout the country are hoping this surge in new homes will be a boon for the overall economy. Despite the surge in home construction, certain areas of the country are still underserved in terms of the number of houses the market is demanding.

According to the Houston Association of Realtors, housing inventory was enough to last 3.2 months at the end of June for the city - meaning at the rate of current home sales, sellers would run out of new houses in less than three months. Economists consider a housing market balanced when the housing inventory can last 6.5 months. With such a limited supply of available new homes on the market for interested homebuyers, builders will be hard at work constructing new houses until this number reaches a more balanced equilibrium.

Now is the perfect time for people looking for land for sale in Texas to develop in master planned communities. New homebuilders can take advantage of a strengthening housing market that continues to gain momentum.

For more information on building custom new homes in the Texas Hill Country and the master planned community of Vintage Oaks, contact SouthStar Communities.

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Homebuilders' confidence levels continue to increase along with improving economic data.