Homebuilder Confidence and Existing Home Sales reports signal improvement in housing market.
Monday morning brought two positive economic reports: the November Homebuilder Confidence Index and the October Existing Home Sales report. The National Association of Home Builders reported that the November Homebuilder Confidence Index rose to 46 – its highest level in five years. Economists had been expecting a reading of 41.
From the report:
Builder confidence in the market for newly built, single-family homes posted a solid, five-point gain to 46 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for November, released today. This marks the seventh consecutive monthly gain in the confidence gauge and brings it to its highest point since May of 2006.
“Builders are reporting increasing demand for new homes as inventories of foreclosed and distressed properties begin to shrink in markets across the country,” said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. “In view of the tightening supply and other improving conditions, many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.”
“While our confidence gauge has yet to breach the 50 mark — at which point an equal number of builders view sales conditions as good versus poor — we have certainly made substantial progress since this time last year, when the HMI stood at 19,” observed NAHB Chief Economist David Crowe. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”
Also on Monday, the National Association of Realtors released its report on Existing Home Sales for October. Although the consensus expectation was for sales of 4.74 million at a seasonally-adjusted annual rate (SAAR), the actual result was 4.79 million. Nevertheless, the September result was revised downward to 4.69 million. September inventory was revised downward to 2.17 million from 2.32 million and September months-of-supply was downwardly revised to 5.6 months from 5.9 months.
From the Report:
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.1 percent to a seasonally adjusted annual rate of 4.79 million in October from a downwardly revised 4.69 million in September, and are 10.9 percent above the 4.32 million-unit level in October 2011.
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The national median existing-home price for all housing types was $178,600 in October, which is 11.1 percent above a year ago. This marks eight consecutive monthly year-over-year increases, which last occurred from October 2005 to May 2006.
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Distressed homes - foreclosures and short sales sold at deep discounts – accounted for 24 percent of October sales (12 percent were foreclosures and 12 percent were short sales), unchanged from September; they were 28 percent in October 2011. Foreclosures sold for an average discount of 20 percent below market value in October, while short sales were discounted 14 percent..