A new survey that found rising optimism among homebuilders nationwide also resonates with St. Louis builders.
The National Association of Home Builders/Wells Fargo Builder Sentiment Index, released Monday, rose this month to its highest level in 10 years.
The October index was 64, up from 61 in September.
The last time the reading was higher was October 2005 at 68. Readings above 50 indicate more builders view sales conditions as good rather than poor.
The index has been consistently above 50 since July last year.
Kim Hibbs, owner of Chesterfield, Missouri-based Hibbs Homes, said he and others in the St. Louis area’s custom homebuilding market “are definitely feeling optimistic.”
“Inquiries are up substantially over the past few years and we are in the planning stages for new construction projects that will take us well into 2017,” he said. “Many of our clients are finding that there are fewer existing homes on the market, so building is an option to explore.”
Hibbs said he just returned from the NAHB’s fall board meetings, where he found that custom builders nationwide have a reason to be optimistic about the market.
Throughout the St. Louis region, homebuilders anticipate a brisk fall selling season, said Patrick Sullivan, executive vice president of the Home Builders Association of St. Louis & Eastern Missouri.
“Many of the things we are hearing from local builders echo the national sentiment,” he said. “Buyers realize mortgage rates are low and are eager to take advantage of what new homes have to offer, especially in the areas of design, technology and energy-efficiency.”
Builders’ improved optimism bodes well for a pickup in new home construction, which could help give the U.S. economy a boost. The supply of new homes has been scarce, so greater construction could result in more sales.
The latest NAHB/Wells Fargo builder index reflects a gradual but consistent strengthening in the market for new homes, said David Crowe, the NAHB’s chief economist.
“With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015,” he said.
Builders’ view of current sales conditions and their outlook for sales over the next six months surged. A measure of traffic by prospective buyers held steady.
Healthy hiring and smaller price increases for new homes have begun pushing up sales, which were hammered during the Great Recession and recovered slowly even after the downturn ended in 2009.
New-home sales have soared nearly 22 percent in the past year. They hit a seasonally adjusted annual rate of 552,000 homes in August, the strongest pace since February 2008. September’s sales data are due out next week.
This month’s builder index was based on 384 respondents.
Builders’ view of current sales conditions for single-family homes rose three points to 70, the highest reading since October 2005.
Builders’ outlook for sales over the next six months surged seven points to 75. That’s the highest reading since August 2005. A measure of traffic by prospective buyers held steady at 47.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB data.
This story includes reporting by the Associated Press.
