Homebuilders, Housing Analysis

New Construction Buyer Foot Traffic Nearly Triple of 2009

March 21, 2012 by · Leave a Comment 

Yes You Can by Amy Wynn PastorFor the second consecutive month, the National Association of Homebuilders reports the March Housing Market Index at 28. Similar to the February HMI, an HMI value at 28 is double the reading from just 6 months ago and is the highest HMI value since June 2007.

When home builder confidence reads 50 or better, it reflects favorable builder conditions in the single-family, new home market. Readings below 50 suggest unfavorable conditions for home builders.

The HMI itself is a composite reading. It’s the result of three separate surveys sent to home builders by the trade association. The NAHB asks builders to report on their current single-family home sales volume; their projected single-family home sales volume for the next 6 months; and, their current buyer “foot traffic”.

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Home builder confidence in the newly-built, single-family housing market remains high. Approximately 400 surveys are returned each month. The results are compiled into the NAHB Housing Market Index.

In March, home builders provided mixed replies to the survey questions :

  • Current Single-Family Sales: 29 (-1 from February)
  • Projected Single-Family Sales: 36 (+2 from February)
  • Buyer Foot Traffic: 22 (Unchanged from February)

Despite slowing sales in March, it is noteworthy that home builders expect a surge in new home sales over the next 6 months. The reasons for this are several and should be of interest to today’s home buyers.

HMI 2000-2012

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First, the jobs market is heating up. The U.S. economy has added more than 1 million jobs over the last 6 months and that is increasing the number of potentially eligible home buyers in Northwest Indiana and suburbs of Chicago Illinois. 

Second, the housing market in general is improving. Home sales are brisk in Northwest Indiana and home supplies are dropping. This creates pressure on home prices to rise.

Third, low mortgage rates have helped pushed home affordability to all-time highs. More home buyers earning the national median income can afford a median-priced home than at any time in history. 

It’s all culminated in a monthly Buyer Foot Traffic reading of 22, which is nearly triple the foot traffic reading from just three years ago. Home buyers in Northwest Indiana and suburbs of Chicago Illinois are out in full-force, capitalizing on today’s buyer-friendly market.

If you’re looking to buy new construction in the second half of 2012, consider moving up your time frame. Market conditions are constantly changing and may move out of your favor. As builder optimism increases, the price you pay for your new home may increase, too.

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