Mortgage records showing rates at steady, low levels can greatly benefit home buyers, public property records showing appreciated sale prices can be of an advantage to home sellers. However, although shrinking inventory levels would open the door for home construction professionals to profit, a scarcity of available building lots has recently hampered development and affected the confidence levels of industry members.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for April was released this week, and detailed a drop of two points - to a reading of 42. In addition to a dwindling amount of buildable lots, construction professionals cited the heightened cost of materials and labor as additional reasons for the slight slip.
"Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values," said Rick Judson, chairman of NAHB. "While sales conditions are generally improving, these challenges are holding back new building and job creation."
The recent figures affected many regional HMI scores, causing the West to drop three points to 55, the South to fall four points to 42 and the Midwest to log a two-point slip to 45. However, the regional HMI score for the Northeast held firm, remaining unchanged at 38.
In April, the HMI component gauging current sales conditions exhibited a decrease of two points to a level of 45, and the component gauging buyer traffic fell four points to 30. However, the component gauging sales expectations for the following six months posted its highest level since February 2007, gaining three points to settle at 53.
Consumers report higher level of confidence in housing
Though home building professionals may be reporting recent dips in confidence levels this month, consumers may be feeling significantly better. According to Prudential Real Estate's Consumer Outlook Survey for the first quarter of 2013, 77 percent of respondents believe that the housing market, as well as property values, will recover.
In addition, the survey found that 96 percent of Americans said homeownership has remained important to them, and 87 percent of individuals think the best time to buy a home is when mortgage rates are low.
"Anticipation seems to be building for both buyers and sellers this spring buying season," said Earl Lee, president of Prudential Real Estate. "Consumers are aware that the market is moving and, with growing optimism, more are weighing their homeownership options."