With its best increase in 5 years, nationally, single-family home building permits climbed 1.3% in May to 622,000 permits. Also, overall housing starts rose 6.8% in May. The housing market owes the higher percentage of housing starts to the multi-family market, but the increase of starts for apartment complexes also is a reflection of a steadily recovering real estate industry.
Typically, local builders have held back on even applying for permits on new homes because they are anxious to get rid of standing inventory before starting another project. In the Greater New Orleans area, there has been an average of a 4 – 6 month supply of homes yet to be sold. Another deterrent to home builders has been the complexity and difficulty of getting their new home construction project financed by local banks and lenders. However, two new developments have happened in the month of June, which is spurring growth in real estate.
The first development is that according to the National Association of Home Builders’ (NAHB’s) HMI (NAHB/Wells Fargo Housing Market Index), builder confidence hit a major milestone in June. Any score above 50, according to this survey is an excellent number. Based on 3 market conditions asked of builders in the survey, all three sections had high scores.
“The index gauging current sales conditions increased eight points to 56, while the index measuring expectations for future sales rose nine points to 61 – its highest level since March 2006. The index gauging traffic of prospective buyers rose seven points to 40.”
Also, in just the Southern region, expectations of future growth went up 4 points – the highest of all three regions in the United States. The second development which can be construed as both a positive and a negative for builders of new homes is that there is currently a shortage of building materials. While this poses a problem for those builders who are moving forward with positive results in this economy, the shortage of materials is also a signal to the market that there is indeed a demand for these materials and therefore a demand from buyers for new homes.
This demand also translates over into the local markets. The Greater New Orleans market has been seeing bidding wars in popular, safer neighborhoods. Realtors are literally begging their past clients to sell their homes because the demand is so high, and they can get record prices for their home – well above asking. The market may soon shift to a seller’s market once again, and builders in this area seem to be ready for it.
Lots here at The Parks of Plaquemines are selling out quickly, and we have also had interest from architects and builders in building new “spec” or inventory homes for people to buy in our subdivision. To find out more about purchasing a home in The Parks of Plaquemines, just minutes from New Orleans, Contact Us at 504-364-2350 or E-mail Info@TheParksLifestyle.com.