Buyers of new construction may find the 2013 housing market less friendly than the one of 2012.
According to the National Association of Home Builders (NAHB), U.S. homebuilder confidence has climbed to its highest point in more than six years, reflecting an improving economy and a growing pool of buyers which has outpaced home supply.
Fewer Foreclosures Drive Builder Optimism
In November, for the seventh straight month, the NAHB reports an increase in the Housing Market Index. The builder confidence metric, which is scored on a scale of 1-100, rose five points to 46 — its highest reading since May 2006.
November’s confidence surge can be attributed to the national foreclosure markets, said the home builder trade group. With the “for sale” inventory of distressed and foreclosed homes down sharply in many U.S. markets, there is tighter home supply nationwide. Buyers are scrambling to find homes however they’re available.
Recent data from the National Association of REALTORS® shows home resale inventory down more than 20% year-over-year. With supply scarce, more buyers are turning to new construction. Indeed, Housing Starts rose sharply in October.
Demand is steady by region, too :
- Builder confidence in the South rose 4 points in November
- Builder confidence in the West rose 3 points in November
- Builder confidence in the Midwest rose 3 points in November
- Builder confidence in the Northeast rose 2 points in November
The figures for the Northeast Region are especially noteworthy given that the HMI survey was conducted after Hurricane Sandy. The Northeast Region includes New Jersey, New York and Connecticut.
In addition, across all four regions, builders continue to witness high-volume buyer foot traffic patterns and a strong sales figures. Over the next six months, new construction sales are projected to increase, too.
For buyers, this will lead to higher home prices through 2013.
Home Buyers To Pay More In 2013
After several years of slow growth, the U.S, economy is poised to expand. Job growth is returning, business investment is increasing, and the housing market, which has long been a laggard, is more than 12 months off of its bottom.
For home buyers of new construction, economic growth will contribute to higher home prices in 2013. And, with mortgage rates expected to rise next year, too, the cost of financing a home will grow as well.
If you’re looking at new construction and wondering whether to buy in 2012 or buy in 2013, the “best deals” in housing may be the ones you take today. Get started with a rate quote to build your household budget.