Hi friends!
Starting off this year, I've noticed something pretty cool happening in the world of homebuilding. It turns out I'm not the only one feeling a bit more upbeat lately – homebuilders are too! For the second month in a row, they're looking at things more positively. I came across this report from the National Association of Home Builders (NAHB) and Wells Fargo, and guess what? Their Housing Market Index (HMI) has gone up by seven points to 44 this January.
So, what's behind this burst of optimism? Well, it seems like it's mostly because mortgage rates have been staying under 7% recently. I read this statement from Alicia Huey, who's the big boss at NAHB. She said that lower interest rates last month made homes more affordable. This is great news because it means people who were put off by high borrowing costs are now getting back into the market. Alicia also mentioned that we should see more single-family homes popping up in 2024, which is awesome for anyone looking to buy a new place.
Let me break down how this NAHB/HMI report works. Every month, they ask homebuilders, especially the smaller, local guys, about how they see the current sales situation, what they think it'll be like in the next six months, and how many people are showing interest in buying new homes. They crunch these numbers, and if the score is over 50, it means more builders are feeling good than not.
But hey, it's not all sunshine and rainbows. Despite feeling more optimistic and even with lower mortgage rates, builders are still having to cut prices and offer deals to sell homes. The report says that about 31% of builders dropped their prices in January, with an average cut of 6%. The number of builders slashing prices went down a bit from December, but still, 62% of them are offering some sort of sales incentives.
There's also some updates on how sales are doing right now and what builders think about future sales. The current sales conditions got a seven-point boost to 48, and the traffic from potential buyers went up five points to 29. The best part? Builders' expectations for sales over the next six months shot up by 12 points to 57!
Still, it's not all smooth sailing. Experts, like Robert Dietz from NAHB, say builders will face challenges this year – things like rising costs and maybe not having enough materials like lumber, or enough land and people to work.
Looking at different parts of the country, most regions are seeing a bit of an upturn. The West went up a little, the South a bit more, and the Northeast had a pretty big jump. The Midwest stayed the same as last month.
All in all, as we go through 2024, it looks like the homebuilding world is getting back on its feet with more confidence and a bit of hope. But, we've got to keep our eyes open for the challenges that might pop up. Stay tuned!
I hope you have found this blog post super helpful. If there is anything else we can do for you, including helping you sell (or buy) a home, I would be honored to assist. I hope you have a great day/evening. Cheers, E + J.
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