New Home Sales Up 18.6% in May, 2014
Not only are the numbers looking good for home buyers and home sellers starting off the spring buying season with a bang, but builder confidence also rose 4 points as well, bringing its HMI score to 49. New home sales of single-family homes rose to 504,000, up from 425,000 in April, which is an 18.6% gain. This is the largest gain in new homes sales since May, 2008 before the Recession. The HMI is a survey conducted by Wells Fargo and the National Association of Home Builders. Surveys are taken of builders’ prognosis or optimism levels for the following three categories: current sales, expected sales, and the amount of traffic that builders are getting of new home buyers visiting their new homes for sale. The HMI has been closely monitored by everyone in the real estate industry because only builders are “on the ground” and able to give a temperature of the housing market nationwide. Any number at 50 or above is considered a positive indication of the housing market. The HMI rose above 50 and stayed their for over 8 months in 2013, but with the unseasonably harsh winter weather, the HMI dropped to 46 and stayed there for 4 months. June’s score indicates a sharp rise in builder confidence in the market.
The National Association of Realtors also reported an increase in existing home sales which rose 4.9% in May compared to April numbers. Most people wouldn’t think that a decrease in the pace of home appreciation would be a good thing, but the record-breaking increase in home prices have been a concern for economists and investors alike who feared that the economy was headed into another housing bubble. Home pricing increase only 10.8% from April, 2013 – April, 2014, which was down from 12.4% year-over-year for March, 2013 and 2014. Many industries have been watching for indications of slow growth when it comes to housing appreciation and pricing increases.
Even though the Fed has reduced its bond buying program by another $10 billion, it has states that rates will remain at the 0 or near 0 level when it comes to interest rates. Many had feared that with a surprisingly positive job report – unemployment dropped into the 6% range – that the Fed would accelerate its plan to completely suspend its bond-buying program. Even though the job report was positive, the economy (GDP) numbers still did not show a strong enough sign of strengthening to merit modifying the program’s schedule of “tapering.”
Locally, in St. Tammany Parish, many builders are seeing staggering increase of 2nd and 3rd home purchases as well as orders for custom homes ranging in price from $500,000 – to over $1 million. With low interest rates that will probably stabilize and then begin to rise and a slight easing of construction loan requirements, many home buyers are “getting off the fence” and moving forward with plans to build a new home specifically designed to their specifications. Many Builders in Bedico Creek Preserve have extensive in building Custom Homes for sale and are working with people who have purchased Lots in the subdivision. The real estate market is slowly on the rise, and lots are moving fast in our subdivision. If you have not yet had a chance to tour our new home community, Contact Us to visit today! Call 985-845-4200 or E-mail [email protected].
