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NAHB released the Housing Market Index that it compiled in tandem with Wells Fargo ($34.15 0%) on Tuesday. The report shows the Home Price Index reaching its highest point since March of 2007.
The key housing market index gained six points in July, increasing to 35. This is the largest one-month gain recorded by the index in nearly a decade, and brings the HMI to its highest point since March of 2007.
The index evaluates builders’ perception of strength when it comes to single-family home sales in the United States.
The indices measuring current sales conditions and prospective homebuyer traffic rose six points to 37 and 29, respectively, on the index. In addition, the index measuring sales expectations for the next six months rose 11 points to a score of 44.
Any number over 50 suggests the majority of builders view conditions in a particular segment of the market as “good”.
“Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This is greater evidence that the housing market has turned the corner as more buyers perceive the benefits of purchasing a newly built home while interest rates and prices are so favorable.”
Fitch Ratings views the report as highly optimistic when it comes to the fate of homebuilders.
The ratings agency believes single-family housing starts will improve by at least 12% while new home sales will rise 10.5%.
“Housing growth should be slightly more robust next year,” Fitch said. “Single-family starts should expand 14%, while new home sales advance 12%.”
Wednesday, July 18, 2012
By David Wessel
The housing market has turned—at last.
The U.S. finally has moved beyond attention-grabbing predictions from housing “experts” that housing is bottoming. The numbers are now convincing.
Nearly seven years after the housing bubble burst, most indexes of house prices are bending up. “We finally saw some rising home prices,” S&P’s David Blitzer said a few weeks ago as he reported the first monthly increase in the slow-moving S&P/Case-Shiller house-price data after seven months of declines.
Nearly 10% more existing homes were sold in May than in the same month a year earlier, many purchased by investors who plan to rent them for now and sell them later, an important sign of an inflection point. In something of a surprise, the inventory of existing homes for sale has fallen close to the normal level of six months’ worth despite all the foreclosed homes that lenders own. The fraction of homes that are vacant is at its lowest level since 2006.
The reduced inventory of unsold homes is key, says Mark Fleming, chief economist at CoreLogic, a housing data-analysis firm. For the past couple of years, house prices have risen in the spring and then slumped; the declining supply of houses for sale is reason to believe that won’t happen again this year, he says.
Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.
“Even with the overall economy slowing,” Wells Fargo Securities economists said, cautiously, in a note to clients, “the budding recovery in the housing market appears to be gradually gaining momentum.”
Builders began work on 26% more single-family homes in May 2012 than the depressed levels of May 2011. The stock of unsold newly built homes is back to 2005 levels. In each of the past four quarters, housing construction has added to economic growth. In the first quarter, it accounted for 0.4 percentage points of the meager 1.9% growth rate.
“Even with the overall economy slowing,” Wells Fargo Securities economists said, cautiously, in a note to clients, “the budding recovery in the housing market appears to be gradually gaining momentum.”
From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses. “Manufacturing had led growth and construction had lagged,” JPMorgan Chase economists said last week.”Now the roles are reversed: Manufacturing growth has slowed as private construction comes to life.”
But the housing bust is over.
David Wessel at capital@wsj.com
@48beach for news, updates, pricing, open houses at
4805-07 Central Avenue in Ocean City, NJ
RISMEDIA, Monday, July 09, 2012—
Record tight inventories are making it increasingly difficult for growing numbers of buyers, who are creating multiple-bid environments in markets that haven’t seen buyers battle over homes in six years.
Buyers are back but sellers aren’t, especially in markets recovering from large volumes of foreclosures. The result is that inventories are still tightening as the spring buying season ends. Buyers are fighting over what’s available, often to the benefit of those sellers who took a risk in this year’s evolving marketplace.
Throngs of renters looking for a place in the sun.
Hurry!
That’s the advice of a seasoned Ocean City rental manager about making vacation plans.
“We’re busier, definitely ahead of last year. It started out that way on Martin Luther King weekend,” Berger Realty Rental manager Deedra L. Bowen said.
“We’re always ahead, the norm is 10 percent, but right now we’re at 20 percent ahead of last year. This weekend has been huge,” she said, picking her way between a crowd of clients and their children at their bustling office at 3160 Asbury Avenue.
“The sun makes a difference,” she said as she carefully wended her way to her desk at a real estate business that has handled Ocean City properties for 90 years.
Bowen, who has been in real estate for 15 years, is seeing a few new trends.
First, there are more young families coming down with toddlers. Often they are third or fourth generation renters from the same family. Next — and related — demand has softened for gigantic multiple-generational houses as extended families are splitting off and looking for age-appropriate rentals better suited to their specific needs.
Tony and Marlene Bria of Warminster, PA, who have come to Ocean City each of the 32 summers they’ve been married, exemplify just that.
The couple, who rent through Monihan Realty, had rented the same multi-generational place for the past four years to accommodate both their older parents and their adult children.
On Sunday, they were looking for a more “kid-friendly” home for their grandchildren to vacation with them since Marlene’s mother and step-father are no longer coming to the shore. They’d scouted 12 locations and were ready to sign a lease.
“Something with space to store kids bikes and strollers,” Tony Bria said.
Michael Monihan, whose family began the eponymous real estate business in 1947, said the Internet, dual-wage earner families with limited vacation time and the competition of package vacations to exotic locations have changed the bustle of President’s Day weekend for renters, but the draw of picking out a place at the shore remains.
However, Ocean City’s prime rental season has shrunk as schools and activities run longer into June and school and activities start up again sooner in August. But demand for the heart of the summer is up this year over last year — and last year was their best year ever, Monihan said.
Nicholas J. Marotta, president of the Ocean City Board of Realtors, said members over all are reporting their rentals are up 10 to 14 percent over last season.
Most owners are holding the line on rates, all three Realtors agreed, a product of the stalled economy.
That suits Michael Messenger, a second-year renter from Pennington, NJ, seeking a “reasonably priced” and child-friendly rental through Berger. He had focused in on a property after reviewing several.
Monihan said they rent the smallest and oldest places for as little as $500 a week, while larger beachfront properties in the best locations command as much as $10,000 a week — and few ask for more.
The heart of Monihan’s market, though, is a three-bedroom, two bath place on Asbury Avenue in the 30s, which rents for $2,000 to $2,300 a week during the best weeks.
As for sales, Monihan and Berger’s Frank Shoemaker are seeing the start of price stability in what had been a dropping market for the past several years, but both said demand was mostly in the low-range to mid-level, with top-priced properties still very sluggish movers.
Sill, Marotta said the total number of property sales increased by five percent last year as buyers took advantage of lower property prices and low mortgage rates.
“As far ahead as we are, there will be no last-minute deals this year,” she said.
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