In the quieter winter months it seems that many home builders are holding steady in their confident outlook on the market while home owners are taking advantage with the lull of the season by increasing remodeling projects.
In January overall home builder confidence downgraded just a point to a value of 57 on the National Association of Home Builders/Wells Fargo Housing Market Index. This is the third straight month that the index has stayed in the upper 50s range, which is a sign for positive gradual growth. Any number over 50 indicates that there are more builders that have a positive outlook than a negative outlook on the market and the sustainment of these values indicate that builders are continually feeling conditions are strong for new construction.
“After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occurring in many markets throughout the nation,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.
While the overall index fell, local readings indicated a growing index in the west by four points to 66. This may result in an increase in home construction, which could greatly benefit the inventory-strapped Southern California real estate market. Inventory deprivation has been a continual hiccup for the national real estate market, however if builders are able to hold steady, increased home starts could be on the horizon.
“January’s HMI reading is in line with our forecast as we head into the new year,” said NAHB Chief Economist David Crowe. “Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015.”
Home Remodels Grow
With inventory becoming such an issue for those looking to make a home purchase, home owners have instead been looking inward for changes to their surroundings. A housing index that measures activity in the remodeling market recorded an all-time high value in the final months of 2014.
The National Association of Home Builders’ Remodeling Market Index increased to 60 in the fourth quarter of 2014. Like the Home Builder Index, any reading above 50 indicates a positive outlook on the market. This reading is rather promising as the recession had essentially put a halt to major remodeling projects for home owners. Many home builders are now reporting a dramatic increase in activity.
“The recent pace and volume of business has been a boon to our remodeler members’ confidence in the recovery of the housing market,” says NAHB Remodelers Chair Paul Sullivan. “The upward trajectory of the RMI results over the past year has shown that home owners are ready, willing, and deciding to remodel.”
This is also an important factor for the real estate market as home buyers will have a fresh crop of updated and remodeled homes to look forward to in the busy spring season.
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