Nov 7, 2012 | Housing Analysis
The U.S. economy continues to improve.
The National Association of Homebuilders released its Improving Markets Index Tuesday. The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating “measurable and sustained growth”.
125 U.S. markets are qualified as “improving” this month, a 22-market jump from the month prior and and all-time high for the index which launched late last year.
Compared to November 2011, this month’s IMI has climbed more than four-fold, rising from last year’s reading of 30. This jump suggests that housing recovery is firmly taking root, helping to generate needed jobs and economic growth across much of the country.
So what qualifies a market as “improving”? The NAHB uses strict criteria.
First, the group gathers data from the three separate, independent sources :
- Employment growth from the Bureau of Labor Statistics
- Housing price appreciation from Freddie Mac
- Single-family housing permits growth from the U.S. Census Bureau.
Next, for each of the above data sets, the National Association of Homebuilders separates for local data in each U.S. major metropolitan area.
And, lastly, armed with data, the NAHB looks for areas in which growth has occurred for all three data points for six consecutive months; and for the most recent “bottom” is at least six months in the past.
In this way, the Improving Market Index doesn’t just measure housing market strength — it measures general economic strength.
Of the 22 markets added to the Improving Market Index in November, the following cities were included : San Diego, California; Gainesville, Florida; Omaha, Nebraska; Louisville, Kentucky; and Charlotte, North Carolina.
Several markets dropped off the list, too, including Hanford, California; Orlando, Florida; Terre Haute, Indiana; and Greenville, North Carolina.
The complete list of 125 metropolitan areas on November’s IMI, plus breakouts of the metropolitan areas newly added and dropped is available online at http://www.nahb.org/imi.
Oct 17, 2012 | Housing Analysis
As home prices rise, so does home builder confidence.
Tuesday, the National Association of Homebuilders reported its monthly Housing Market Index (HMI) at 41, a one-tick improvement from September and the highest HMI value since June 2006 — a span of 77 months.
The Housing Market Index is a homebuilder confidence indicator. When it reads 50 or better, the HMI suggests favorable conditions for home builders nationwide. Readings below 50 suggest unfavorable conditions for builders.
The HMI has not crossed 50 since April 2006 but the index has been making a run since last year, nearly tripling since the 14 reading of last year’s September.
In addition, builder confidence has climbed for six straight months.
For Worcester County area buyers of new construction, the Housing Market Index may help to set market expectations for the rest of 2012, and into early-2013. This is because the NAHB Housing Market Index is constructed as a composite survey, measuring builder sentiment in three specific areas — current home sales, future home sales, and buyer foot traffic.
What’s good for builders, though, may not be good for buyers.
When builders expect business to improve, they may be less willing to make concessions on price or product, holding home prices high and removing seasonal sales incentives.
This month, home builders are seeing strength in each of the three surveyed areas :
- Current Single-Family Sales : 42 (Unchanged from September)
- Projected Single-Family Sales : 51 (Unchanged from September)
- Buyer Foot Traffic : 35 (+5 from September)
All three values are at multi-year highs but it’s the level of foot traffic that may concern today’s home buyers. Builders report foot traffic through model units to be at the highest rate since mid-last decade. This, combined with a shrinking supply of homes for sale, has contributed to a rise in new home sale prices and suggests even higher home prices in 2013.
Like most of the U.S. housing market, new construction appears to have bottomed in October 2011. One year later, the market looks stronger.
Oct 10, 2012 | Housing Analysis
It’s not just the housing market that’s improving nationwide — it’s the economy overall.
The number of U.S. metropolitan areas showing “measurable and sustained growth” climbed to 103 this month. The data is measured by the Improving Markets Index, a monthly metric from the National Association of Homebuilders.
The Improving Market Index is meant to identify which U.S. markets are experiencing broad economic growth — not just growth in terms of housing.
The index’s conclusions are based on three data series — each collected separately; each from a different division of the U.S. government; and, each tied to specific local economic conditions.
Those three data series are :
- Employment Statistics (from the Bureau of Labor Statistics)
- Home Price Growth (from Freddie Mac)
- Single-Family Housing Growth (from the Census Bureau)
After collating the data, the National Association of Homebuilders evaluates the reports as a group for each specific major metropolitan area.
A metropolitan area can be cited as “improving” only if the following two conditions are met. One, all three data series show expansion and/or growth as compared to 30 days prior; and, two, none of the data series have “bottomed” within the last six months.
As a result of its methodology, the Improving Market Index specifically passes over short-term growth bursts in a market, isolating for areas with long-term, sustainable growth instead.
Furthermore, “improving” cities may be more apt to outperform other U.S. cities in the months and years ahead, rendering them ideal for relocating buyers from Massachusetts in search of long-term employment and income opportunities, as well as real estate investors in want of healthy, stable markets.
33 states are represented in the October Improving Market Index, plus the District of Columbia. 11 new areas were added to the list as compared to September and just 7 dropped off.
The newly-added areas include State College, Pennsylvania and Raleigh, North Carolina. Cities falling off the list for October include Lakeland, Florida.
The complete Improving Markets Index is available for download at the NAHB website.
Sep 19, 2012 | Housing Analysis
Home builder confidence continues to make new highs.
As reported by the National Association of Home Builders, the Housing Market Index, a measure of builder confidence, rose to a reading of 40 in September — its highest mark since June 2006.
The index is now higher through five straight months and 11 of the last 12.
For home buyers in Worcester County area , the survey may be signaling higher new home prices ahead; when builders are more confident in housing, they’re may be less likely to make concessions in price, and to “sweeten” deals with free upgrades and/or subsidized mortgage rates.
The Housing Market Index is published monthly, based on responses to a 3-question survey that the NAHB sends to its members. The questions cover three distinct parts of a builder’s business, each requiring a simple, one-word answer.
Builders are asked to respond with “Good”, “Fair” or “Poor”; or, “High”, “Average”, “Low” to the following three comments :
- Rate market conditions for the sale of new homes today
- Rate market conditions for the sale of new homes 6 months from today
- Rate the foot traffic of prospective new home buyers
All three survey components showed an increase from August with buyer foot traffic rating at its highest point in more than 6 years. This is especially noteworthy because as the number of prospective buyers increases, so does competition for homes for sale.
There are currently just 142,000 new homes for sale nationwide, the stock of which will “sell out” in 4.6 months at the current pace of sales.
Not since October 2011 has the national home supply been above six months, the consensus dividing line between bull and bear market. Today’s new construction market favors builders and builders know it.
If you’re planning to buy new construction in Massachusetts later this year or into early-2013, consider moving up your time frame. Homes may be for sale, but they won’t likely be as inexpensive as they are today.
Sep 12, 2012 | Housing Analysis
The number of U.S. housing markets showing “measurable and sustained growth” has increased by 19 this month, according to the National Association of Homebuilders’ Improving Market Index.
The Improving Market Index is a monthly report meant to identify U.S. markets in which economic growth is occurring broadly — not just in terms of home prices.
The IMI’s conclusions are based on three separately-collected data series, each from a different division of the U.S. government and each tied to specific local economic conditions.
In this way, the Improving Market Index gives a better idea of which markets will outperform averages in the months and years ahead. (more…)
