Extreme Weather Affects Home Building
A couple of weeks before, a number of reports claimed that the confidence of home builders was surging. The trend has reversed but hopefully for just a short time. This month the confidence of US homebuilders has suffered because extreme weather has resulted in potential homebuyers staying under their own roof rather than step out in the cold and hunt for a home.
The spring season is just around the corner, and generally, kicks off with an increase in sales. It will probably be the same case this year as well, but a lot of critics have claimed that sales may not be that impressive. Builders have also stated that chilling temperatures and fierce storms are going to affect spring home sales. In the light of this situation, industry experts have stated home construction is bound to decline.
The report, which was released last week, gives 46% as the value of home builders’ confidence. In the month of January, the observed value was 56%. Ever since May 2013, this is the lowest value that has been observed. Generally, a value that is less than 50% implies that most of the builders believe upcoming sales to be poor.
Since the month of June, the index was estimated to be greater than 50% by all reports that were published during this time. This reflected a strong housing market, but the later report to be released, crunches the favorable predictions of the real estate market. Spring is about to begin, and if there are not enough sales, the industry will suffer a setback. On the other hand, if sales are impressive, it will increase construction in the months to come.
In the year 2013, over 428,000 homes were sold, which is the highest value in the last five years. Compared to 2012, this is an increase by nearly 16%. However, the latest winter season has been severely chilly and temperatures have fallen sharply. All this has led to a decrease in home sales, which have been declining for the past three consecutive months.
A chief economist has stated that home sales are not the builder’s only concern. They also do not have enough skilled workers and are facing delays in the supply of building materials because of the winter storms.
Compared to the overall housing market, new homes comprise only a small percentage, but their impact is significant.
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