Home builders are feeling good
Sentiment hits 7-year high as sales grow
The nation’s home builders are more upbeat than they have been since before the recession, as rising sales and traffic at model homes point to more improvement in the housing market.
Builders’ sentiment about market conditions moved into positive territory for the first time since 2006, the National Association of Home Builders and Wells Fargo Bank reported Monday. On a scale of 1 to 100, with 50 or better meaning more builders view sales conditions as good than poor, the index jumped eight points to 52. The monthly gain was the big- gest since 2002. The climb mirrors the 29% jump in new-home sales the association predicts for this year, NAHB chief economist David Crowe said. Builders said the index actually is running well behind the improvement in sales, which has been gathering steam for at least a year.
“Last year it was, ‘Is this real or not?’ ” said Bill Cellar, chief executive of Providence Homes in Jacksonville. “Now I’d say, ‘Yes, it is.’ ”
More insight on home building comes today when the Census Bureau reports on housing starts and building permits for May. Builders probably began work on enough houses to support an annual pace of 955,000 homes, up from 853,000 in April, according to an economists’ survey by Bloomberg News.
“We’ve already seen pretty significant improvement in new home sales,” said Megan McGrath, an analyst who follows home builders for MKM Partners. Sales haven’t been affected by higher payroll taxes that cut workers’ take-home pay beginning in January, she said.
Builders say the gains have been particularly sharp in markets such as Florida and Arizona, which bore the brunt of the housing bust.
In Phoenix, Fulton Homes expects to sell nearly 800 homes this year, up from 531 in 2012, with prices nearly 30% higher, said Dennis Webb, the company’s vice president of operations. But prices are still at about 2003 levels — nowhere near the 2005-2006 peaks that presaged the bust, he said.
In Florida, Providence is hiring for the first time since about 2006, Cellar said. One of the first hires was an online sales counselor, showing how social media has begun to change the industry during the downturn.
“It’s not like 2005, but I’m not sure anyone wants that back,” Cellar said.