RISMEDIA, February 19, 2009-New home sales, traffic and expectations all picked up in January, especially in Texas. Findings that support this news, and the rise in this week’s release of the NAHB/Wells Fargo Housing Market Index, are detailed in the John Burns Real Estate Consulting February survey of public and private builders across the country. This month, the index number climbed from a record-low of 8 to 9.
“I spent several days in Texas this month and can confirm that the pick-up is real and is driven by lower mortgage rates in an area where home price appreciation was insignificant and the economy is still o.k.,” said John Burns, CEO of Irvine, Calif.-based John Burns Real Estate Consulting.
“We caution overreacting because new home prices are still trending down everywhere, including Texas,” said Burns. “We look forward to calling a bottom in home price declines, but we are definitely not there – in any region of the country. An index of 9 is on par with November and December, the second worst number since the index began in 1985.”
Survey Highlights:
– Sales and Traffic Up Slightly: Nationally, the builders’ rating of current sales improved slightly for the second consecutive month, while traffic moved to Low from Very Low. The rating of expected sales again improved slightly. Average net sales per community increased to 1.4 this month nationally, from 1.0 last month.
– Low mortgage rates and a healthy Texas economy are the reason. Our contacts are reporting increasing improvements in traffic and a slight uptick in sales, though this is very submarket and product specific. The increases were most pronounced in Texas, which we confirmed by visiting with several Texas builders last week. Starting only one home per community. Starts per community averaged 1 unit nationally last month, but 40% of our survey participants reported zero starts. Interestingly, 14% indicated they were starting 3 or more units this month, up from 9% last month.
– Cancellation rates declining: Most builders reported can rates between 16% and 30%.
– Pricing decreases in many regions: Home prices net of incentives continue to decline monthly, as excess supply, and competition from foreclosures priced below the cost to build, destabilizes pricing.•
– Inventory declining: Unsold, finished inventory shifts minimally within regions and several show decreases. Communities have 4.7 units of standing inventory on average. Most notably, the Southwest and South Florida dropped 2 and 3 units per community respectively.
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