With economic and housing market factors trending upward throughout much of the year, both consumers and builders will be going into 2013 more optimistic than in recent years. A new report from the National Association of Home Builders reveals builders are more confident in activity regarding newly built properties.
Data from the December Housing Market Index shows builder confidence in the housing market increased two points, marking the eighth consecutive month of gains. NAHB notes this is also the highest level seen by the index since April 2006, before the housing market slump began.
Housing market activity has been unusually high, as noted in mortgage records, even throughout the slower season for applications and sales. This is likely credited to high affordability offered by mortgage rates, which has resulted in increased sales and lower inventories throughout many markets across the country. While these factors have made home buying less challenging financially, strict lending standards put in place at the start of the recession have made getting approved for a mortgage difficult.
“Builders across the country are reporting some of the best sales conditions they’ve seen in more than five years, with more serious buyers coming forward and a shrinking number of vacant and foreclosed properties on the market,” said NAHB chairman Barry Rutenberg, a home builder from Gainesville, Fla. “However, one thing that is still holding back potential home sales is the difficulty that many families are encountering in getting qualified for a mortgage due to today’s overly stringent lending standards.”
Another component of the index, which measure sales expectations for the current time being, also grew by two points on a month-over-month basis to 51. A separate measurement of sales expectations for the next six months declined slightly, falling one point to 51. Together, the three index figures are used to measure anticipated activity from buyers in the new-home market, with predicted traffic of those making the investment improved by one point to 36.
Despite positive news of improving aspects of the newly built market including a closing gap between buyer demand and seller supply, there are many other areas in which it can get better. In a recent report from Freddie Mac, the GSE predicts that home prices and sales will remain strong in 2013, while mortgage rates will likely stay below 4 percent, providing additional affordability.