Real Estate Outlook: Builders Regain Optimism

by Carla Hill

As we enter the new year, builders are seeing many area market conditions returning to normal.

National Association of Home Builder's chairman, Bob Jones, reports that "we are seeing market conditions returning to normal in many parts of the country after a long, hard downturn, and these companies have the agility to move quickly and start leading the economy forward. But first they need access to financing to build, which remains scarce during this critical phase of the recovery.”
 
Additionally, single-family home sales have risen by 5.5 percent. Theses new figures from the U.S. Commerce Department showed a partial bounce-back from sales in October.
 
This rise is attributed to sales increases in both the South, the nation's largest housing market, which saw a 5.8 percent gain, and the West, which saw an impressive 37.3 percent rebound over October.
 
The inventory of new homes for sale is now at an 8.2-month supply, at 197,000 units. According to the NAHB, this is the first time in 42 years the inventory has fallen below the 200,000 level.
 
NAHB's Jones reports that "while builders continue to face a great deal of competition from short-sale and foreclosure properties, the improvement registered in new-home sales in November is a good sign."
 
He continues that "with consumer interest in new homes expected to continue to revive as the economy and job markets improve, and inventories of new homes for sale near record lows, our concern now is that a lack of construction financing will keep builders from being able to expand the selection of what they have to offer buyers heading into the spring.” 
 
In other news this week, the recently signed HR4853, otherwise known as the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, will extend Bush era tax brackets and a capital gains tax rate of 15 percent through 2011 and 2012.
 
It will also extend numerous energy efficiency credits through December 31, 2011 -- the Energy Efficient New Homes, Energy Efficient Existing Homes, and Energy Efficient Building credits.

Published: January 3, 2011