Following a few months of positive gains in confidence, it seems home builders throughout the country are losing their swagger a little bit. The monthly National Association of Home Builders/Wells Fargo Housing Market Index indicated a fall in October to a level of 54.
The index is the result of a poll of builder expectations of current market conditions for single-family homes, as well as sales expectations for the next six months and traffic of prospective buyers. Scores from the three different categories are then used to calculate a seasonally adjusted index.
Any value more than 50 indicates that there are more builders with a positive outlook for the market than there are those with a negative outlook. The index had gained throughout the summer, with positive additions for the four months prior to October. However, from September to October, the outlook fell five points from a 59 to a 54. Despite this dip in the index value, it is still managing to remain in the mid-50s, which is where the index sat for some time at the beginning of the summer and is indicative of the gradual pace of housing recovery according to Kevin Kelly, NAHB Chairman and a home builder in Wilmington, Delaware.
The West and South of the country fared the best when looking at the three-month moving average broken down by region. Bolstered by strong local economies, the South rose two points to 58, while the West lost only a point on its own index, coming to 57.
“After the HMI posted a nine-year high in September, it’s not surprising to see the number drop in October,” said NAHB Chief Economist David Crowe. “However, historically low mortgage interest rates, steady job gains, and significant pent up demand all point to continued growth of the housing market.”
Los Angeles Housing Market Shifts Into Neutral
As builders are downshifting their confidence, so is the Los Angeles home market, which has struggled to gain meaningful inventory levels throughout the last 12 months. According to Altos Research, a California-based real estate analytics company, there are currently about 2,098 properties on the market in Los Angeles.
Many were hoping that the higher confidence levels in builders noted earlier in the year would help consumers and home owners to get a little more active on the market, but inventory has yet to even broach its high point for the last year, which occurred in November 2013 when there about 2,800 properties on the market.
While tight inventory and rapidly growing prices were keeping many home buyers on the sidelines, prices have at least responded to buyers’ needs somewhat by regulating their growing trends. From March to July Los Angeles home prices were gaining on a steep incline, but have since fallen off just a little bit. As of October 17 the median single-family home value in Los Angeles is $639,465.
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