FROM JOHN MURPHY HOMES BLOG
This is quite the perfect looking chart, isn’t it? It’s moving up not quite at a 45 degree angle but it is consistently moving higher in the past 3.5 years and really since the market bottomed in late 2011. Home prices are still a bargain compared to many parts of the country and it’s still likely much cheaper for people to own their own homes rather than rent.
No one knows of course how long this will continue at this consistent pace. The crash of 2008-2010 is still WAY too fresh in a lot of peoples’ minds but the one thing I will note is that we don’t have the super risky mortgages that we had before. Can it pull back? I suspect it will but by how much and when is not something I can speculate on.
The National Association of Home Builders, NAHB, published it’s latest findings with the monthly survey it conducts of home builders optimism. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) has been in the high 60’s and briefing hit the low 70’s the past few months. For August the report showed a healthy reading of 68. We are back to the same level of confidence we were at prior to the housing market crash. However, what’s interesting in my mind is that while builders’ confidence levels are very high, they are not building nearly the number of homes that they were building 2005-2007. They are doing a much better job of managing growth and controlling costs. They also have move upstream with more and more new homes being built for buyers with more money and credit as just reported by CNBC.
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