With housing data released by the U.S. Commerce Department, the status of the new home sector remains similar to last month’s data with some minor changes.
Builders (like any other real estate related sector) have been highly impacted by the slumping economy, namely with obtaining funds and moving product. But while other sectors sink lower, starts are up 4.4% in single family homes in September and permits issued remain at the same level as August.
The National Association of Home Builders (NAHB) reports that builder confidence is up in October for the first time in five months, but it is notable that the confidence is merely a tick- the industry remains cautiously optimistic.
“The new-homes market is finally moving past the lull that occurred when the home buyer tax credits expired and economic growth stalled this summer,” noted NAHB Chief Economist David Crowe. “While challenges such as competition from foreclosures, inaccurate appraisal values, and general consumer uncertainty about the economy and job market continue to be major factors, builders have seen a slight increase in consumers who are considering a home purchase. The toughest obstacles really come down to financing – the scarcity of construction credit for builders along with tougher mortgage requirements for consumers.”
So to boil it down, the new home sector is relatively steady right now- starts are up, permits are level, and although lending is still complicated, builders remain cautiously optimistic. Much of the future in the new home sector will rely on unemployment rates nationally, so it’s still no sure thing.
Sheila Rasak
October 20, 2010 at 12:11 am
All that being said, there’s good cause for being slightly optimistic in that affordable newer housing is less costly in terms of repair and maintenance for the new owner. If I were a first time buyer in this market, I’d be looking at something easier to maintain with a clean start.
Aaron Catt
October 20, 2010 at 11:02 am
Thanks for the post on what seems to be, ‘not more bad news’!
I think that while it’s good to see signs of stabilization from a National standpoint, it’s imperative that agents and consumers both have a firm understanding of the locality of real estate–both new and used.
Every market offers clear and unique opportunities for housing.
Al Lorenz
October 20, 2010 at 11:54 am
Most of the “new” homes in our market were completed in 2008 and sometimes before. There haven’t really been any projects designed and implemented since the housing bubble burst. Something done from current land prices designed to hit the price points in this market might do well, but there is no sales data to confirm it!