Home Builder Confidence, or Lack Thereof
Calculated Risk offers us this fevery look at home builder confidence through Jan. 09.
CR–an economist who covers housing–has a couple of observations.
The housing market index (HMI) increased slightly to 9 in February from the record low of 8 set in January.
Note: any number under 50 indicates that more builders view sales conditions as poor than good.
John Burns, a housing analyst who looks at housing economics from the dirt up, observes a pickup in the market based on his own company’s survey of home builders:
Nationally, the builders’ rating of current sales improved slightly for the second consecutive monthwhile traffic moved to Low from Very Low. The rating of expected sales again improved slightly. Average net sales per community increased to 1.4 this month nationally, from 1.0 last month.
Low mortgage rates and a healthy Texas economy are the reason. Our contacts are reporting increasing improvements in traffic and a slight uptick in sales, though this is very submarket and product specific. The increases were most pronounced in Texas, which we confirmed by visiting with several Texas builders last week.
Starts per community averaged 1 unit nationally last month, but 40% of our survey participants reported zero starts. Interestingly, 14% indicated they were starting 3 or more units this month, up from 9% last month.
Cancellation rates declining: Pricing decreases in many regions: Home prices net of incentives continue to decline monthly, as excess supply, and competition from foreclosures priced below the cost to build, destabilizes pricing.
Inventory declining: Unsold, finished inventory shifts minimally within regions and several show decreases. Communities have 4.7 units of standing inventory on average. Most notably, the Southwest and South Florida dropped 2 and 3 units per community respectively.
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