New home sector down, creative measures taken
The new home construction sector has hit a series of speed bumps as new home sales plummeted in February to their lowest level since recording began in 1963, not to mention permits for new homes hit their lowest level in recorded history, construction spending is down, and housing starts hit their lowest level since 1984 and some analysts are even saying new home construction will never recover.
Builders are strapping down to survive, some are hedging their bets by snatching up expensive land while others get creative and buy resale homes in their subdivisions to rent out.
Builder confidence across the nation
Despite all of the above, some regions are still optimistic about the new home construction sector. Nationally, after six months of stagnant builder sentiment, the overall sentiment dropped a small amount but with noted optimism about buyer traffic and pessimism about sales expectations, according to the National Association of Home Builders.
The biggest drop in sentiment was in the South, yet the Northeast and Midwest builder sentiment actually budged up and the West didn’t change at all.
“The spring home buying season is getting off to a slow start due to persistent concerns about home values as more foreclosures seem to be hitting the market, increasingly restrictive lending requirements for home buyers and builders, and the slow pace of economic recovery,” acknowledged NAHB Chief Economist David Crowe. “While pockets of improving activity are appearing in some markets, the best sales activity appears to be happening in the lower price ranges, where first-time buyers have greater flexibility than repeat buyers who must sell their current home. Consumers who can take advantage of today’s low mortgage rates and very attractive pricing are finding bargains and are buying.”