The Time to Buy New Construction in the Bay Area

The Time to Buy New Construction in the Bay Area

NAHB Housing Market Index (April 2009-March 2011)

Homebuilders are optimistic about the housing market this spring, relative to recent months.

According to the monthly Housing Market Index as published by the National Association of Homebuilders, after 4 straight months of reading 16, March homebuilder confidence ticked 1 point higher to 17.

Home Builder Confidence

It’s the highest confidence reading in 10 months.

A value of 50 or better indicates “favorable conditions” for home builders; with more builders viewing sales conditions as “good” than “poor”.

HMI hasn’t read higher than 50 since April 2006.

Regionally, the Housing Market Index showed mixed results. Confidence fell 1 point in the Northeast, held firm in the Midwest, and rose in the Southeast and West regions by 2 points and 4 points, respectively.

As an index, the monthly survey is actually a composite of three separate homebuilder surveys — a report on single-family sales; a report on current buyer foot traffic; and a projection for single family sales in the next 6 months.

March’s HMI breakdown shows that builders expect sales to be brisk over the next few months. Projected Single-Family Sales is running at its highest level since May 2010 — right as the $8,000 federal homebuyer tax credit was ending.

  • Single-Family Sales : 17 (Unchanged from February)
  • Buyer Foot Traffic : 12 (Unchanged from January)
  • Projected Single-Family Sales : 27 (+2 from February)

For home buyers in the Tri Valley and across the country , the March Housing Market Index may signal the end of “builder discounts” and free upgrades. As home sales increase, builders are often less likely to make concessions.

In conjuction with rising mortgage rates and new, mandatory loan costs, buying a newly-built home may never be as inexpensive as it is right now.

Recent Conversation

Recently on Trulia.com there was a question asked by a home buyer in San Ramon regarding if the price was negotiable for new construction and if they were allowed to use a buyers agent.  The common mis conception when purchasing a new home that it is like walking into a store and paying a price for good noted on the item. The fact is new construction is treated the same as a regular Real Estate transaction and with increased sales anticipated this year it is a great time to connect with a  qualified Realtor with a proven track record.

If you expect to buy a newly-built home this year, consider moving up your time frame. The longer you wait, the more it may cost you.

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