The year 2016 was an eventful one for home building.
The latest data the U.S. Census Bureau and HUD released shows the inventory of completed but unsold new houses on the market reached 128,000 in March — the highest level ever recorded since 1973.
The home sales slump had to happen eventually. Nervous builders across the country are asking: How long will this slowdown last? How bad will it get? The answer depends on the characteristics of your local market.
This month, we feature two markets that have strong job growth and excellent affordability: Austin and Salt Lake. Both markets are experiencing job growth in almost every sector of the economy (see chart included) and both markets have experienced very little price appreciation this decade.
As the 2005 tax season wraps up, keep in mind next year's new tax credit for new homes qualifying as energy efficient. The Energy Policy Act of 2005 (EPACT), signed by President Bush in August 2005, outlines new Federal tax credits for consumers and businesses pursuing energy efficient usage. Home builders can claim EPACT tax credits up to $2,000 for the construction of a qualified new energy-efficient home.
Despite rising oil prices and a drop in consumer spending and income, indices closed in positive terrain for the month ending March 31, 2006. The Builders' Index added 12.32 points, or 0.98 percent, to end March at 1264.97.
Builders can obtain demographics and other economic data from various government and private sources. However, some builders have their own ideas for getting a better read of their marketplace. In addition to tracking real estate deals to uncover emerging trends, builders in some markets have shown the local Multiple Listing Service can be a powerful tool for demand analysis.
Experts consider housing affordability a primary driver of housing demand. If a buyer's income rises and mortgage rates and/or house prices decline, chances are homes are going to sell like hotcakes...right? Maybe not. The National Association of Realtors' Housing Affordability Index estimates the percentage of a house that a household earning median income can afford.
Some negative news including predictions of a sustained decline in the housing market in 2006 slowed the markets in December. The anticipated so-called Santa Claus rally never materialized, but other factors such as soaring consumer confidence numbers for December left investors scratching their heads.
Whoever said a rising tide lifts all boats didn't know boats. All boats, like all building companies, fare very differently in the same conditions. No two voyages are exactly the same. Even with the best captain and an experienced crew, navigating rough seas and storms takes a blend of technical know-how and sheer brass.