A faster-than-expected turnaround in homebuyer demand, following a sharp drop-off at the start of the coronavirus pandemic, has the nation’s homebuilders bullish on their business again.
Builder sentiment jumped a striking 21 points in June to 58, the largest monthly increase ever in the National Association of Home Builders/Wells Fargo Housing Market Index. Any reading above 50 indicates a positive market. In April, it plunged a record 42 points to 30.
“Inventory is tight, mortgage applications are increasing, interest rates are low and confidence is rising.” …. NJ New Home Builder
Mortgage applications to purchase a newly built home jumped 10.9% annually in May, according to the Mortgage Bankers Association.
Buyer traffic more than doubled from May to June, from 22 to 43.
One of the nation’s largest public homebuilders, Lennar. Chairman Stuart Miller said the company had stopped its new home starts and stopped purchasing land in March, only to have to reverse course unexpectedly.
Lennar (builder) indicated that the stories of urban flight are real, as people are rethinking the way they want to live in an age of lockdowns and work-from-home orders. That trend appears to be playing out among all the builders.
“Builders report increasing demand for families seeking single-family homes in inner and outer suburbs that feature lower density neighborhoods,” said NAHB Chief Economist ..
Regionally, builder sentiment in the Northeast surged 31 points to 48 (people leaving cities) , and 20 points to 62 in the South. In the Midwest it rose 19 points to 51, and in the West it rose 22 points to 66. CNBC 6-16-20