The NAHB/Wells Fargo Housing Market Index reached 60 in July and along with the one-point upward revision to June’s index mark a high in the index not seen since November 2005. Two of the three components of the index also rose to levels last seen in late 2005. The index of current sales rose one point from the June level to 66, topping almost 10 years of values below that level. The index for expected sales rose two points from June’s 69 to 71 also the highest in almost 10 years. The index for traffic fell one point to 43 from the six month high in June of 44.
Builders report more serious buyers are visiting models and discussing prices and features. While buyers are taking more time to decide to buy, more of them are finally making those decisions. However, builders remain concerned about their access to lots and labor. Ready-to-build lot supply continues to be the biggest concern among builders as the cheaper lot supply left from the bust is about exhausted, the pipeline of new developments was interrupted by very limited access to capital from regional and community banks and competition for the available lots has intensified.
In a May 2015 survey, 62% of builders scored lot supply as low or very low, up from 59% in May 2014 and 43% in September 2012. As a result, 70% rated the price of A lots as somewhat or substantially higher than a year ago. B and C lot prices were also rated higher by 61% and 53% of the builders, respectively. One of the results of higher land prices has been difficulty delivering modestly priced homes for first time home buyers. Builders reported the share of homes sold to first time home buyers was 18%, up slightly from last year at 16% but well below the historic average of 30%.