There is great news forecasted for not only the housing market, but the build-to-rent market as well. Home builders feel terrific about the future of U.S. housing. With today’s mortgage rates ultra-low and U.S. rents rising, home builders are planning for another strong finish to the year for housing, and a fantastic start to 2017.
Market confidence among the nation’s builders is at decade-best levels. As measured by the National Association of Home Builders’ Housing Market Index (HMI), home builder sentiment reads 63 out of 100, which is a “confident” figure.
Home builders plan to sell more than 650,000 new homes this year, and buyers could usher in even higher demand next year. It could be a good ideal for home shoppers to buy this fall and winter, before the spring rush.
Once monthly, the National Association of Home Builders (NAHB) surveys its members on current housing market conditions; and their outlook for the housing market’s future. The results are compiled into the Housing Market Index. Informally, the report is called the “home builder sentiment survey” and it reflects home builder attitudes about the nation’s single-family, new construction housing market.
The index is one of the most anticipated reports published each month, because it provides clues to housing market health six-to-twelve months in advance. Home builders gather real-time, “on the ground” data as they observe buyer foot traffic and actual sales in their day-to-day business. They recognize real estate trends long before economists do. For instance, a home builder sees rising interest in its homes. Potential buyers visit model homes and sign contracts to buy. In response, the builder obtains new building permits and breaks ground on developments. Conversely, it will hold off on projects if foot traffic wanes.
Without the Housing Market Index, economists may only have access to data for planned or started homes. But that data is a lagging indicator of what happened in the market months prior. This forward-looking report is important to economists, but can be valuable to investors in the build-to-rent sector and the everyday home buyer, too
Many buyers today feel they have “missed out” on future home appreciation, now that house values have risen steadily since 2012. They feel demand for homes will drop and, in turn, prices will cool off.
Home builders would beg to differ. Today, builder sentiment reads a healthy 63, just two points down from September’s 2016-best rating of 65. The report signals continued strength in the housing market. In the NAHB Housing Market Index, 50 is the inflection point in the index between “good” conditions and “poor” ones; and November’s reading marks the twenty-ninth straight month in which the HMI has logged north of 50.
Buoyed by low mortgage rates and big demand from buyers, home builders believe today’s housing market is solidly in positive territory. Home buyers who have been on the sidelines should consider buying before the rush of spring 2017. November’s HMI indicates the market will be strong next year and perhaps beyond. To learn more about the build-to-rent market how to invest in it, contact a member of the 9 Core Realty team.