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As "new home" sales fall to all-time lows, homebuilder confidence is rising. It appears as is the nation's home builders -- the ones still in business, anyway -- have figured this housing market out.
Two months ago, homebuilder confidence touched a multi-month low. Home low were prices and mortgage rates the same, but homes weren't moving. Then, something clicked in the market. Buyers bought newly-built homes.
September sales of spiked 6%. New home inventory dried up, dropping to an minuscule 163,000 units nationwide, and representing a supply of just 6.2 months.
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October's results figure to be similarly strong so it's no wonder that the Housing Market Index surged again in November, climbing another three points to 21. After scraping that multi-month low, the HMI has now posted a 3-point gain in two consecutive months, catapulting the index to an 18-month high.
The Housing Market Index is monthly report from the National Association of Homebuilders. It's meant to measure confidence among the nation's homebuilders, scored on a scale of 1-100. When homebuilder confidence reads 50 or better, it reflects favorable conditions for homebuilders. Readings below 50 reflect unfavorable conditions.
The Housing Market Index has read south of 50 since May 2006.
As an reading, the Housing Market Index is actually a composite figure; the result of three separate surveys sent to homebuilders each month.
The National Association of Homebuilders asks it members about current single-family home sales volume; projected single-family home sales volume over the next 6 months; and current "foot traffic". Its results are compiled for the "headline" number, but the association makes individual survey responses available, too.
In November, builder responses were stronger across all 3 categories :
And, while these are each encouraging signs for the new construction market, the clear winner is how "Current Single Family Sales" has now climbed 3 points for the second straight month, even as the availability of homes is falling.
In short, builders are clearing their glut, and they're doing it quickly.
We won't see October's New Home Sales data for another two weeks, but expect that report to confirm what homebuilders are telling us today : demand is up and supplies are down.
For buyers of new construction, it's higher home prices ahead.
Home builders predict higher sales levels over the next 6 months, and are seeing the foot traffic to back it up. Prices are expected to rise.
For now, though, home prices are stable and mortgage rates are low. If you're in the market, therefore, the next 60 days may prove to be your best time to get "a deal" on new construction -- jumbo home or otherwise.
Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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