Southeast housing update: Polls show existing home sales improve; new home building remains sluggish
The Atlanta Fed's monthly poll of regional residential real estate brokers and home builders indicated sales were mixed in March. Southeastern builders reported that new home sales growth weakened notably in March. More than half said that new home sales declined compared with a year earlier. Reports from southeastern brokers indicated that sales growth improved in March, with half reporting sales increases from a year earlier.
However, gains reported by Florida brokers largely drove improvements in the Southeast. More than two-thirds of Florida brokers reported sales increases in March on a year-over-year basis. Many Florida brokers reported that distressed sales and cash sales continued to drive sales in many parts of the state, a situation confirmed by recent reports: The Orlando Regional Realtors Association reported that 71 percent of home sales in March were short sales or foreclosures and 54 percent of transactions were cash.
Both builders and brokers continued to report their growing frustration with their access to financing. Most builders and brokers' complaints focused on bankers and regulators who they felt needed to reevaluate stricter lending guidelines that were shutting out many buyers and giving preference to cash buyers.
Southeastern builders reported that construction activity weakened notably in March on a year-over-year basis, and the outlook softened as well. However, these comparisons are made against last year’s slight bump in activity, which was associated with the federal housing stimulus.
In recent months some regional builders have reported anecdotally they were doing more home improvement work, so in our March poll we asked our panel about recent activity. Southeastern home builders seemed to indicate that home improvement construction activity in the first quarter was about even with a year earlier. However, builders anticipate improvements in the second quarter, with more than half expecting an increase.
Similarly, builders have reported persistent rising material prices, accompanied with downward pressure on new home prices. So builders were asked if they have been able to effectively pass along cost increases in the home improvement work they have bid. It appears most builders are unable to pass along rising material costs.
Similar to reports on sales, the outlook for southeastern brokers continued to improve while builders anticipate new home sales to soften on a year-over-year basis.
Note: March poll results are based on responses from 91 residential brokers and 43 homebuilders and were collected April 4–13, 2011. The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity, while negative values indicate decreased activity.
By Whitney Mancuso, a senior analyst in the Atlanta Fed's research department
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