If you want to know what’s happening with home prices, it’s really just a matter of supply and demand. When there are a lot of houses available for sale and not many buyers, prices fall. When there are a lot of buyers but not a lot of homes to buy, home prices rise. That’s been the case lately. The number of homes for sale has been low for a while now and, since
buyer demand is high, prices and competition have been increasing steadily in a lot of markets. With fewer opportunities for buyers and prices rising, there’s been a lot of attention focused on builders. But why? Well it’s because, as builders build new homes and put them up for sale, home prices moderate and affordability conditions improve, helping to balance the market. So naturally, the hope is that new home construction picks up. One measure of how the new home market is doing is the National Association of Home Builders’ Housing Market Index. The index scores builders’ confidence in the new home market on a scale where any number above 50 indicates more builders view conditions as good than poor. In October, the index fell to 63, but remains at its second highest level this year. Ed Brady, NAHB’s chairman, says the results indicate new home construction should continue to make gains. “Even with this month’s drop, builder confidence stands at its second-highest level in 2016, a sign that the housing recovery continues to make solid progress,” Brady said. More here.