The latest round of real estate data shows home-builder confidence is soaring as homes in the United States become more affordable. In California, prices and sales appear to be on the mend.
In a note back in May, Ian Sheperdson, chief U.S. economist for High Frequency Economics, wrote that the improvements in the housing market may be a result of credit loosening. The lack of readily available home loans has been a significant hindrance and one of the stumbling blocks to a rising market, he wrote.
Reacting to the rise in builder confidence, Sheperdson’s note further stated that the key factor is improving access to mortgage finance versus the level of rates, which have been very low for a long time. After a credit event, availability of credit is an important factor to real recovery; housing is on the cusp, he wrote.
Also in May, the National Association of Home Builders reported that its index of confidence in the market for newly constructed single-family homes climbed to a level of 29, the gauge’s highest reading since May 2007.
The West was the only region that saw a decline, down two points to 29. The Midwest and South were up five points each to hit 27 and 28 respectively, and the Northeast was up six points to 32.
In many housing markets, builders are reporting that sales and buyer traffic have picked back up after a pause this past April, Barry Rutenberg, chairman of the builders association, said in a news release.
It appears we have resumed the gradual upward trend in confidence that started at the beginning of this year, as excellent affordability and stabilizing prices encourage more people to pursue a new-home purchase, he stated further in the release.
A separate index produced by the National Association of Realtors indicated that homes in the United States reached a record level of affordability in the first quarter of this year. According to research, the index shows a family that earns the median annual income of just under $61,000 can afford a home costing $325,500.
And finally, home prices and sales appeared to improve in the Golden State as well, according to the California Association of Realtors. The statewide median price rose above $300,000 for the first time, and sales were at their highest level in more than two years, the group said.
A record-high housing affordability coupled with a brighter economic picture, pushed the Spring home buying season off to a strong start, LeFrancis Arnold, president of the association, said in a news release.
With interest rates declining to new record lows in recent weeks as well as a continually improving economy, we should see a steady improvement in the housing market throughout the end of the year, Arnold said further.
The California real estate group also reported that the amount of inventory on the market remained low. About four months and just under a week’s worth of homes were available for sale on the market, according to the association’s inventory index. Around six to seven months is considered a healthy market.
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