Calculated Risk, Bill McBride Analysis on NAHB rates

I always like to check in with this blog. He often posts a lot of really great numbers and is a fantastic resource for the housing market as a whole. He's a retired economist and has some great contacts and data as a result.

Although he reports that the numbers look great overall, I'm a little skeptical as to how they look for our local market. Taylor Morrison in particular has come in to build their many units that are more or less brown stone like town homes that are on itty bitty lots. Irvine Company looks like they are adding inventory as a result of the new development off of Jamboree and San Joaquin Hills Road. On the peninsula, there is the hotel that is being built on the site of the old city hall, which is going to consist of 130 rooms. The other peninsula development is on the bay front next to the Crab Cooker, which is supposed to be shops and restaurants, including maybe Nobu, and condos above. Finally, there are always intermittent large lots that are purchased, torn down and in place of the strange structure that was there before are several free standing homes with direct access garage, tiny lots and a small street down the middle of the original large lot.

At our corporate office meeting last week, many agents were very upset to hear about the new development with the idea that the development was directly negating the charm of Newport Beach. I agree in the sense that this does seem like quite a bit of additional inventory. However, I could be totally wrong. I tried to ask the city representatives if they could tell me what rate they are increasing inventory as a result of the new construction that has happened in the last few years. Unfortunately, they could not tell me. I really don't think I can truly comment on how much inventory is being added until I get the numbers.

As long as there is still a demand for inventory, there is supposedly more supply we need. Obviously looking at current sales will and can help. Maybe, I will include those for tomorrow to provide better analysis and follow up for the local building.

Below is Bill McBride's blog post on building rates, which prompted this post in the first place.

NAHB: Builder Confidence at 64 in October, Highest in 10 Years

by Bill McBride on 10/19/2015 10:06:00 AM

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 64 in October, up from 61 in September. Any number above 50 indicates that more builders view sales conditions as good than poor.

From the NAHB: Builder Confidence Rises Three Points in October

Builder confidence in the market for newly constructed single-family homes rose three points in October to a level of 64 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This month’s reading is a return to HMI levels seen at the end of the housing boom in late 2005.
...
“With October’s three-point uptick, builder confidence has been holding steady or increasing for five straight months. This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” said NAHB Chief Economist David Crowe. “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.”
...
Two of the three HMI components posted gains in October. The index measuring sales expectations in the next six months rose seven points to 75, and the component gauging current sales conditions increased three points to 70. Meanwhile, the index charting buyer traffic held steady at 47.

Looking at the three-month moving averages for regional HMI scores, all four regions posted gains. The West registered a five-point uptick to 69 while the Northeast, Midwest and South each rose one point to 47, 60 and 65, respectively.

emphasis added

image: https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhtaMLYdYCwAVHWJ5SP9yhJngXHsHd4UHsoBZdzr7UpdixTu7l3MFFI44qWC8gFl3-i2GfjbJS-2vhbh4qn99wleHwgClvLUhZOGPwvrkSBDYWwg1Z87dF-D1wL7Pic1QpM9q0iqI5OurKl/s320/NAHBOct2015.PNG
HMI and Starts Correlation