While real estate is beginning to show renewed signs of life, it appears builders are also detecting improvements in their situation as well.
The National Association of Home Builders reported that the September builder sentiment index had risen to 40, up from the 37 value in August. Although still in the range below 50 (meaning a continuation of some negative sentiment about the housing market), it is the highest value since June of 2006. Shortly after that date the economy tanked.
Another metric used is the builders’ 6 month sales outlook, and that has entered positive territory this month at a value of 51. That too is the highest value since June of 2006. Builders have reported that they are experiencing the best sales levels since July 2006 and the largest turnouts of potential buyers since May 2006. All this may portend a housing recovery that is beginning to gain traction and may endure.
The Associated Press reported in September that, “Sales of both new and previously occupied homes are running ahead of last year. Home prices are increasing more consistently, in part because the supply of homes has shrunk and foreclosures have eased in many states…mortgage rates remain near record lows, beckoning potential buyers with good credit.”
Even with that good news, economists are still a bit skeptical about a full turn around and recovery in the housing market. The expectation is that until job growth improves and unemployment drops below 8.1 percent, full recovery cannot occur. The earliest a complete recovery in home construction can occur is predicted to be about 2016.
