Builders Raise Prices in California as Confidence Boosts
While John Burns Real Estate Consulting said construction has declined 79% in the nation’s top 20 markets since 2005, there are signs that the market for new homes is recovery and builder confidence is rising. According to the Burns research, 15 of the top 20 markets in 2005 are still somewhere on the current list of top 20 cities for construction, based on permits issued in the regions. But the remaining five markets — Miami, Orlando, Fort Myers, Fla., Minneapolis and Chicago — were replaced by Salt Lake City, Virginia Beach, Va., Seattle, Raleigh-Cary, N.C. and Indianapolis. In addition, the Texas cities of Houston, Dallas and Austin replaced Atlanta, Phoenix and Chicago in the survey's top five cities. But in a separate Burns survey, more home builders reported they were raising prices than lowering them in California, one of the most volatile states since the housing crisis began. In a survey of 269 home building industry executives from public and private companies (62 from California), builders reported net sales per community increased nationally in September to 2 transactions from 1.4 in August. The builders also reported that cancellations are declining, with 61% of executives reporting cancellation rates between 1% and 15%. At the same time, builder confidence is up in September for the third consecutive month, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). But builders are concerned how the expiration of the first-time homebuyer tax credit will affect business, according to the National Association of Home Builders (NAMB). “The window is now basically closed for being able to start a new home that can be completed in time for buyers to take advantage of the tax credit before it expires at the end of November, and builders are concerned about what will keep the market moving once the credit is gone,” said NAHB chairman Joe Robson, a home builder in Tulsa, Okla. Write to Austin Kilgore.