April 18 - New Home Sales, Traffic, Expectations Up!

RISMEDIA, April 18, 2009-New home sales, traffic and expectations all lifted meaningfully in March. Findings that support this news are detailed in the John Burns Real Estate Consulting April survey of builders across the country. According to the survey, while the improvement can be partially attributed to seasonality, we can also point to a shift in builders’ optimism in many metros. The rating of future sales improved substantially, and expectations rose in every single region except the Northwest. 

This month, 233 public and private builder executive representatives from over 160 companies around the country provided market ratings that represent conditions at 1,984 new home communities in 82 unique metros.

“We think the improvement is attributable primarily to improved affordability,” said John Burns, CEO of Irvine, Calif.-based John Burns Real Estate Consulting. “The new home tax credit in California is also helping.”

“Earlier in the year, the gains in traffic and sales were mostly limited to builders at the affordable end, but in April we began to see some gains for move-up builders as well,” said Jody Kahn, vice president. “This trend is still spotty, and limited to a handful of markets, including Raleigh, Atlanta and Nashville.”

Results also showed that builders in a handful of locations have recently purchased land, and that more plan to purchase in the near-term. “We know from prior housing downturns that the resetting of land prices is an important step in the process of clearing the market,” said Kahn.

Survey Highlights:

Land Buying is Increasing: Already this year, 18% of survey participants have purchased land and 29% indicate they will buy land in 2Q09. By 2010, 47% expect to be buying.

Builders are targeting Washington D.C., Charlotte, Dallas and Tampa for near-term land buys. There was a pronounced message that buying would not be occurring in Phoenix, Atlanta, Austin, Chicago, Denver, Las Vegas, Orlando and Orange County for quite some time. There were mixed messages in California markets of Riverside-San Bernardino, San Diego and Sacramento.

Recent buying appears to have been predominantly among private builders. Of purchases made this year, 35% were by public home builders.

Sales, Traffic and Expectations Jump: The builders’ rating of current sales reached a record level since our survey’s inception, traffic ticked up in every region but one, and expectations climbed as builders’ outlook appears to be brightening. No region of the country reported declining net sales per community. Average net sales per community rose to 1.7, which is the highest level since September.

Builders Start More Homes: 70% of builders started homes this month, compared to only 59% last month.

Pricing Net of Incentives Inches Toward Flattening: Overall, the direction of new home pricing moved closer to flat, but regions like Southern California report decreasing prices over last month.

Inventory Declining: The average number of unsold, finished units per community is continuing to trend down nationally, to 4.0 units from 4.2 last month. This is the lowest number we have seen in more than six months.

For more information, visit: www.realestateconsulting.com.

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