The U.S. housing market appears to be on the mend. Demand for new homes has put contractors back to work and added more money to municipal budgets and local economies. This is helping offset the high number of foreclosures and fallen home prices of the past few years. New home starts are up to over 700,000 a year per the most recent Commerce Department report.
This is some of the best housing market news for several years, but new home construction is still less than 50 percent of what it averaged during the decade before the crash. May permits for new homes rose to the highest level in four years to an annual rate of 780,000. Other good news for the housing market is stabilizing home prices and a decrease in homeowners getting behind on their mortgage payments.
States least affected by the housing slowdown and with relatively low unemployment, such as Iowa and North Dakota, are seeing the highest new home numbers. States suffering the most in the housing crisis, like California and Florida, are experiencing a much slower recovery with their oversupply of homes still available.
At the current rate in places like Greenville, S.C., supply is not going to meet the demand. Manufacturers like BMW and General Electric have increased their numbers of new hires so much that new home developers are busy trying to keep up. In Dallas-Fort Worth, Texas Sandlin Homes has sold 246 homes during the first quarter of 2012, more than all they sold in 2011. Windsor, CO officials planned on about 200 new single-family home permits for 2012, but builders have already pulled that many through the first half of the year.
The National Home Builders Association/Wells Fargo Housing Market Index (HMI) monthly survey showed that builders’ confidence level is at its highest since 2007. This is probably based on the continued, gradual improvement in housing markets as buyers are taking advantage of lower prices and interest rates. There are still the major obstacles of “overly tight lending conditions and inaccurate appraisals” which keep home sales from being completed.
The housing market had to heal itself with foreclosures and price adjustments. In February 2012, the five largest U.S. banks settled for $25 billion on the regulators’ investigations of bank abuses. Foreclosures which were in stall mode since the end of 2010 have moved forward and the market is now dealing with them.
KB Homes reported an 11 percent increase in revenues for the second quarter of $302.9 million as compared to $271.7 million in the second quarter of 2011. Toll Brothers, the largest U.S. luxury home builder, reported quarterly orders up 47 percent and a net income of $16.9 million for February through April of 2012, compared with a loss of $20.8 million a year earlier. The next U.S. Department of Commerce new residential construction data is expected to be released this week on Wednesday, July 18, 2012. Hopefully the new housing construction numbers will continue to rise as these large home builders report double-digit revenue increases.