Winter Deals a (Slight) Blow to Housing
Business Contact Surveys: Construction and Real Estate
Although fewer Southeast builders and brokers reported an increase in home sales than in previous months, the majority of contacts continued to indicate an increase in sales on a month-over-month and year-over-year basis.
Reports on buyer traffic were mixed. As reflected by the near-zero reading on the diffusion index, an equal share of contacts reported that traffic had increased and decreased. Although most contacts indicated that winter weather conditions slowed buyer traffic, a few contacts indicated that Web inquiries during the same period increased.
Most of our Southeast builder and broker contacts indicated that inventory levels have fallen from year-earlier levels.
Most brokers and builders continued to report that home prices increased slightly in February, compared to year-ago levels.
Overall, builders continued to report an increase in construction activity in February. But fewer builders reported an increase this month than in the past few months.
Three-quarters of our Southeast broker contacts reported that the amount of available credit either meets or exceeds demand.
Similar to the broker results, nearly two-thirds of builders indicated that the amount of available credit meets demand.
More than three-quarters of our builder contacts and just shy of three-quarters of our broker contacts indicated the recent bouts of severe winter weather had an impact on their business.
While investor buyers were still active across the Southeast market, business contacts (on average) reported that investor buyers accounted for just 17 percent of homes sold. That represents a 7 percent decline in share from one year earlier and a 9 percent decline from 18 months earlier.
The majority of broker and builder contacts indicated that they do not expect the recent weakness in housing to persist. Most pointed to higher home prices, rising mortgage rates, and limited inventories (not weather events or declining investor participation) as the factors contributing most to the recent weakness.
Over the next three months, the majority of builders and brokers expect home sales to increase. While expectations remain fairly positive, contacts were slightly less optimistic about future sales growth compared to one year ago.
Half of builder contacts expect construction activity to increase over the next three months, which represents a less optimistic outlook compared to responses from one year earlier.
•This poll was conducted March 3–12, 2014, and reflects activity in February 2014. Sixty-five (65) business contacts across the Sixth District participated in the poll: 23 homebuilders and 42 residential brokers.
•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, and negative values indicate decreased activity.
•If you know of a real estate broker or homebuilder who would like to participate in this poll, please contact RealEstateCenter@atl.frb.org.
Check out January 2014 survey results.
Southeast Home Sales vs. a Year Earlierchart:survey_1403a.jpg showOnHome