US Property Builders Optimistic for 2018

Property builders and developers in the US are feeling the most optimistic they have for almost two decades for the prospects of new home sales.

The National Association of Home Builders/Wells Fargo builder sentiment index for December rose five points from the previous month to reach a high of 74. This represents the highest reading seen since July 1999.

Readings above 50 on the home builders index indicate that more builders see sales prospects for new developments as good rather than poor.

The home builders index has been above 60 for over a year now, since September 2016. However, the reading of 74 still came as a surprise as recent surveys of analysts by FactSet had predicted a reading of 70.

All three components of the index rose in December. The reading gauging builders’ view of single-family home sales rose four points to 81, while the outlook for sales over the next six months ticked up three points to 79. The measure of traffic by prospective buyers also rose considerably by eight points to 58.

According to the US Commerce Department new home sales rose in November to a seasonally adjusted annual rate of 685,000, the third straight monthly gain and the best sales total since October 2007, before the global financial crisis.

Many buyers are turning to new construction due to an ongoing dearth of existing homes for sale in the US, partly due to a downturn in construction following the worldwide recession.

A healthy job market with a 4.1 percent unemployment rate and attractive 30-year mortgage rates that are averaging less than 4 per cent all combine to increase optimism amongst US builders and developers, who are struggling to keep pace with the increased demand from potential buyers searching for homes.

UK overseas property investors may feel that now is the time to look across the pond again and consider investing in US real estate.