Home builder confidence puts its strongest July reading in thirteen years; today’s mortgage rates and the 5-day trend; and, making your best offer for a home.
Home Builder Confidence Suggests Higher Home Prices Ahead
U.S. homebuilder confidence is at a 13-year high for July.
According to the National Association of Home Builders (NAHB) and its monthly Housing Market Index, U.S. homebuilders feel good about the future of housing.
Three questions comprise the homebuilder confidence survey:
How is the current sales volume for your new homes?
What do you expect sales volume will be over the next 6 months?
How is foot traffic through your model units for sale?
The trade group compiles builder replies for each question, then scales them as a composite value between 1-100. The highest recorded value is 77 (June 1999).
The lowest recorded value is 8 (January 2009).
For July 2018, home builder confidence reads 68. It’s the highest reading for a July since 2005, and for buyers of new construction, the most recent Housing Market Index signals that builders may be less willing to negotiate on price between now and 2019.
Buyers can expect fewer free upgrades to kitchens and bathrooms as well.
If your housing plans include the purchase of a newly-built home between now and early-2019, either as a first-time buyer or repeat buyer, consider that the best deals in new homes may be the ones you find today.
Because, with mortgage rates up and builder confidence rising, the costs of homeownership can climb.
It doesn’t matter if your pre-approval letter comes from an online lender or anyone else — you just need the letter to start the process. The seller has to know you’re qualified and a pre-approval letter proves it.
Next, ask yourself “How much house can I afford?”
How much house you can afford is a question of monthly payment — not list price on a home. Find the number that you’re comfortable spending each month. Then, work backward to find a realistic purchase price based on today’s actual mortgage rates.
This online mortgage calculator that does the math for you, and when you know your specific budget, you’re unlikely to overpay for a home.
Third, get yourself a real estate agent.
As a home buyer, you don’t pay to use a real estate agent; the seller pays from its commission after the sale. It’s free for home buyers to work with real estate agents.
A good real estate agent performs the following services for buyers, and more:
Interprets the data you find online into market analysis with meaning
Shepherds you through the purchase, handling your paperwork and communication
Negotiates with the seller’s real estate agent on your behalf
And, make sure to get your own real estate agent. Do not use the seller’s agent, a scenario known as dual agency. In a dual agency scenario, the real estate agent’s fiduciary duty is to get the seller the maximum price for the home. There is no consideration for the buyer.
Dual agency can be terrible for buyers of homes. Avoid the scenario by working with an agent of your own. If you don’t have one, ask for a referral.
And, that’s about all you need to do to be prepared — get a pre-approval, know your budget, and have a real estate agent working to help.
Homes are selling quickly today. Prepared buyers are more likely to succeed.
Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.
Housing Market Index
A measure of homebuilder confidence in the U.S. single-family new construction housing market. Published by the National Association of Home Builders.
When a real estate agent represents the buyer and the seller in the same real estate transaction