Comfy Austin

The National Association of Hombuilders tracks the confidence levels of home builders in the housing market.  For the fourth straight month, the confidence level for the group's Housing Market Index reads 16.  So what does this mean in the context of the Austin-San Marcos metropolitan area.

First of all, a value of 50 or better indicates “favorable conditions” for home builders.  So if the reading is only a 16, it means that builders are not making plans to furiously expand their operations, however, it may signal they believe the market is stable.

As a market indicator, Housing Market Index has been tracked for more than twenty years and reports on a 1-100 scale. HMI hasn’t read higher than 50 since April 2006.

So what was happening here in 2006 in the Austin area?  Builders in 2006 produced 17,615 new homes for buyers.  Then in 2007, that figure dropped to 12,120.  Builders caught unprepared for this drop in activity folded or merged with stronger competitors. The home building industry began shedding jobs and consolidating. In 2008, there were only 7,710 homes built.  In 2009, builders produced 6,678 homes and finally in 2010 they produced 6069 homes.  Big slide there in activity, but notice how the numbers in 2009 and 2010 were close to the same. 

Homebuilder confidence in the market for newly-built, single family homes appears stable as the 2011 spring buying season gets underway in Cedar Park and surrounding communities.

For home buyers across Texas , this month’s Housing Market Index reading may foreshadow tougher negotiations in the months ahead with builders. Builders do not have a lot of spec homes they have to liquidate quickly. The likelihood of getting discounts and free upgrades may be diminished as builders see their respective sales levels grow, and as the economy expands.  Although it is not mandatory that a new home buyer be represented by an Austin Realtor when negotiating the purchase of a new home, common sense dictates that the buyer have his or her own real estate agent to help negotiate the best price and provide additional assistance with the selection of upgrades and construction oversight.

If your plans call for buying a newly-built home this year, think about moving up your time frame to take advantage of still low interest rates. Builder confidence appears to have bottomed. As it rises, so should home prices.