Home Construction Rises With The Economy; Higher Home Prices Ahead

• Tweet

The new construction market continues to heat up. For luxury homes and otherwise, builders are prepped for a strong 2012.

Housing Starts Rise To 3-Month High; Builders Optimistic

According to the Census Bureau, Single-Family Housing Starts rose to a seasonally-adjusted, annualized 430,000 units in October -- a 4 percent increase from September and the highest reading in 3 months.

A "Housing Start" is a home on which ground has been broken.

The increase in starts surprised Wall Street analysts, but it shouldn't have. There's a tight correlation between Housing Starts and homebuilder confidence, and earlier this week, the National Association of Homebuilders released it's latest Housing Market Index in which it showed builder confidence at its highest point since May 2010.

Since 2000, Housing Starts and Homebuilder Confidence have moved in tandem.

Click here for a rate quote.

Where Have All The Good Deals Gone?

The combination of rising starts and rising confidence means that today's home buyers can expect higher new construction prices once 2012 begins.

Supplies will rise as more homes are "started", but builders expect those homes to be snapped up. They're building in anticipation of higher sales levels and continued low mortgage rates.

It appears that they'll get both :

• Buyer foot traffic is at its highest point in 18 month
• Mortgage rates are expected to remain sub-5 percent for the next 6 months, at least

As confidence rises, buyers will be less likely to win price concessions in negotiation; and builders will be less likely to give "free upgrades".

Click here for a rate quote.

New Construction : Rising Prices In 2012

For buyers of new construction, the last 6 weeks of 2011 may be the optimal time to buy a home. Prices remain affordable and mortgage rates of all types -- jumbo, FHA, USDA and conventional -- troll near all-time lows.

This makes for excellent home affordability.

Plus, with the holidays, there are fewer buyers with which to compete. You'll have the builder's attention if you make an offer soon -- especially if you're able to close before December 31. For that, you'll want to make sure your bank is on the ball.

Click here for a purchase rate quote.