Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights the Home Builder Index and newly constructed homes.

  • The latest Home Builder Index shows the new home market continuing to feel blue.  A monthly member survey of the National Association of Homebuilders asks questions related to market activity and direction.  The August index figure was 14, down a notch from 15 recorded in the two prior months.
  • A level of 50 is considered a neutral market.  During the housing boom years, the index hovered at 70.  Naturally, there are changes from one month to the next, but the index value in the past 4 years has been stuck at 15 or close to it.
  • One index component is the traffic of potential buyers.  This measure went down from 13 to 11 over the month.

daily091911a

  • In the current housing market, about 95 percent of activity is in the existing home sales market and not in new home sales.  Buyers have been looking for better bargains in existing homes, as builders cannot reduce their prices because of the relatively higher cost of commodities.  Furthermore, some builders who see a business opportunity are hampered in starting a new project due to very restrictive construction loans.
  • The lack of new construction has led to steady fall in inventory.  The inventory of newly constructed homes is, in fact, at a 40-year low.

daily091911b

Advertisement