Realtors are encouraged by the rise in housing production

Realtors welcomed recent news of a nationwide increase in housing production and rise in builder confidence. These are additional indicators that the market is improving, according to the Silicon Valley Association of Realtors.

The National Association of Home Builders said recently released data showed nationwide housing production rose by 6.9 percent to a seasonally adjusted annual rate of 760,000 units in June, the fastest pace of new-home construction since October 2008.

The report follows the latest builder confidence survey that shows builder confidence in the market for newly built, single-family homes was up six points, the largest one-month gain recorded by the builder index in nearly a decade, and the highest point since March 2007.

Findings in both reports show builders and consumers are encouraged by current market conditions as prices and interest rates continue to be favorable, said Suzanne Yost, president of the local association.

“The news from builders is further proof that the market is starting to turn the corner, not just in our region but in other parts of the country as well. Housing is a major pillar of our economy and a good indicator that the economy is seeing some improvement,” said Yost.

The monthly NAHB builder confidence survey is based on the NAHB/Wells Fargo Housing Market Index, which gauges builder perceptions of current single-family home sales, sales expectations for the

next six months and traffic of prospective buyers. Every HMI component recorded gains in July. Components gauging current sales conditions and traffic of prospective buyers each rose six points, to 37 and 29, respectively. Sales expectations for the next six months rose 11 points to 44.

Every region posted HMI gains in July. The Northeast registered an eight-point gain to 36, while the Midwest gained three points to 34, the South gained five points to 32 and the West gained 12 points to 44.

Additionally, NAHB reports single-family housing starts also rose for a fourth consecutive month to a seasonally adjusted annual rate of 539,000 units in June, their fastest pace since April of 2010. Keeping with the solid pace of demand for rental units, multifamily starts rose 12.8 percent to 221,000 units.

Regionally, combined single- and multi-family housing starts rose 22.2 percent in the Northeast and 36.9 percent in the West, but fell back 7.3 percent in the Midwest and 4.2 percent in the South in June. NAHB attributes the declines to monthly volatility on the multifamily side, as single-family starts posted gains across every region in June.

“While many challenges continue to weigh down the housing recovery–including those related to builders’ and buyers’ access to credit, poor appraisals and the number of distressed properties in certain markets–production of single-family homes is now the strongest it has been since 2010 due to rising consumer demand brought on by improving market conditions,” said NAHB chief economist David Crowe.

Americans are seeing more stability in the real estate market, according to Yost. “Prices are affordable and mortgage rates are still at record lows. Today’s consumers realize the many advantages to homeownership. Owning a home is part of the American Dream that provides stability and economic and social benefits,” said Yost.

Information in this column is presented by the Silicon Valley Association of Realtors at www.silvar.org. Send questions to rmeily@silvar.org.


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