Home Buyers Won’t Get Good New Construction Deals For A While

Homebuilder confidence made its biggest one-month jump ever this month, according to the National Association of Home Builders. Expect higher new home prices through this year's second half.

June 22, 2020 by Dan Green

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The Housing Headline

Home builder confidence made its biggest one-month jump in recorded history this month.

The News Behind The Housing Headline

According to the National Association of Home Builders, buyers are back in the market, and builders now expect transactions will return to pre-recession levels in this year’s second half.

The data comes from the trade group’s Housing Market Index. This monthly survey measures builder sentiment using current sales, future projections, and buyer foot traffic through model units for sale.

On the scale of 1-100, the Housing Market Index now reads 58, which marks a twenty-one point jump from the month prior and the most significant one-month increase since the index’s launch in 1985.

The foot traffic of prospective home buyers has tripled since April.

Why This Housing News Matters To You

The U.S. housing market is not in a recession. Supply for homes can’t keep up with demand, and values are rising nationwide. Builders see it on the front-line.

According to real estate data company Altos Research, last week’s home buyers had fewer for-sale homes to shop than during any period in recent history.

Sellers aren’t re-filling the national inventory.

Each week since March, approximately 15 percent fewer homes have gone for sale as compared to what’s typical for the spring selling season; and, the U.S. Census Bureau reports that builders are breaking ground on fewer single-family homes than during any time in the last five years.

Meanwhile, home buyer demand is surging.

The Mortgage Banking Association reports that home buyer mortgage applications reached an 11-year high last week after registering their ninth straight week of gains, and more than half of all homes are selling in fewer than 30 days.

It’s easy to see why home builders are bullish about the next six months.

There aren’t many homes for sale, the number of buyers is increasing, and 30-year and 15-year fixed-rate mortgage rates made all-time lows again last week, based on Freddie Mac data,

At today’s rates, home buyers who borrow $216,000 to buy a house now pay $1,000 to their lender each month – an 8 percent reduction as compared to 12 months ago.

With home builder confidence up and home prices rising, buyers benefit from today’s low mortgage rates.

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