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Encouraging Market Signs for Builders and Sellers

Posted Monday, March 26, 2012

The current housing market is reason to make news headlines on a daily basis. Everyone is watching for fluctuations in the market, hoping to hear things are getting better. For most of the past year, although conditions were highly favorable for buyers, home sales did not rise significantly to the level necessary. The financial sector did not gain enough confidence from the figures to think that a turnaround was taking place. There is a plethora of affordable houses out there along with record low mortgage interest rates. Nonetheless, not enough people were buying again to create much of market rebirth.

However, there is a sparkle of hope in the most recent reports and builders are taking note. One tool that analysts use to measure general feelings and expectations about the housing market is the builder sentiment index. According to the National Association of Home Builders, we are now seeing an index of 28, which is the highest it has been since June 2007. Another reason that has builders increasingly optimistic is the fact that they are reporting many more people interested in buying homes.

Although home prices have continued to fall is some areas, there are other signs of improvements in the general housing market. In January, sales of previously occupied homes rose as well. In fact, the rise was to a level not seen since May 2010. These are definitive indicators of improving conditions. Nonetheless, builders have had to remain competitive by lowering prices and building less. As the law of supply and demand will have it, until the current supply of available homes starts clearing out, prices will remain low. The Federal Government seems intent on keeping interest rates low which in turn will keep mortgage rates low. As of this writing, the average interest for a fixed thirty year mortgage loan is around four percent. Rates this low are bound to be historical and most potential homeowners know this.

Some potential homebuyers have been resisting the urge to buy even with the record low rates and home prices. The reasons for this are mostly fear that prices will continue to drop, and a paralyzing expectation that perhaps interest rates have yet to come lower. However, many have finally decided that the time to buy a home is now, and that is reflected in the recent reports. So for those people struggling, asking themselves: “How will I ever sell my house?”, or worse, thinking: “I will never sell my house”, there are good news. Once the positive news continue coming in, consumers will gain more confidence, and it will have a snowball effect. The more homes sell, the more homes will sell.