The American housing market continues to silence any critics. The latest news is that 389,000 newly-built single-family homes were purchased in seasonally-adjusted September. This represents a year-over-year growth of 5.7% taking sales to the fastest pace since April 2010.
"Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today's data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.
It is hardly surprising that builder confidence is rising, as is shown in rising starts. According to the latest data from the Commerce Department housing starts rose 15% from 758.000 in August to 872,000 in September, marking the third straight monthly rise and beating the Bloomberg economists survey which predicted a rise to 770,000. The Commerce Department report also showed single-family home starts beating multi-family homes, which is a first as the latter has previously been driving the recovery.
This shows that normal house buyers are coming back into the market and buying normal houses again, as opposed to investors buying into the rental market etc.
"Consumers who have been on the side-lines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today's exceedingly stringent guidelines," said Rutenberg.
However, while builders are growing in confidence and buyers are buying more homes, they both share the same problem; the banks still aren't lending like they need to be. Developers are finding difficulty in financing single-family projects and first time buyers need immaculate credit or a big deposit or both to get a mortgage.
While buyers seem to be increasingly finding ways to overcome the difficulty, the number of completed new homes for sale is now at an all-time low and the month's supply is at its tightest since October 2005 because of the financing troubles according to NAHB Chief Economist David Crowe.
- Thursday 25 October 2012