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70 per cent of homebuilders surveyed by Citi said that new home sales in March were higher on a month-over-month basis, compared with 55 per cent the previous month.25 per cent said March sales were flat month-over-month and 5 per cent said sales declined, compared with 15 per cent in February.
While Citi analyst Josh Levin concedes in his note that the survey is skewed more towards qualitative commentary, than a quantitative survey, he says homebuilders have not reported this magnitude of sales spikes since Citi began its survey two years ago.
March new home sales have historically been 18 per cent higher than February sales on average. And homebuilders said prices were mostly unchanged in March from the previous month.
For now homebuilders are experiencing difficulties with land positions, with nearly 20 per cent of respondents saying good lots are a) becoming more expensive b) harder to find. Meanwhile mortgage underwriting standards are also becoming an obstacle to home sales.
Here are some key quotes from homebuilders across the country via Citi. Many are expect sales to pick up but are concerned about scarcity of lots, fuel prices, mortgage underwriting practices and loan processing times :
“We are having continued difficulty with credit quality and loan underwriting requirements. The majority of our prospects require some form of credit repair prior to loan approval resulting in an additional 6 to 8 weeks delay in contract to close.
We find ourselves forced to absorb increases in prices from our vendors in order to continue sales. There is little opportunity to raise prices to our customers even though petroleum related prices continue to escalate. We find ourselves very optimistic for sales for the spring season based on traffic we have seen to date.”
“Overall, the market seems to be improving. Things look pretty good, a lot of requests for remodeling. We’re seeing more typical first time visits versus returning visits.”
“Lots in our market are becoming scarce.”
“Our March was the best we’ve had in quite some time. The only downside is we’ve already had some contracts cancelled because the purchaser couldn’t get qualified for a loan. The fear is fuel prices, which could destroy any rally in the housing market.
We are noticing improvements in appraisals and a definite consumption of foreclosed lots which will ultimately get pricing back to a more normal level.”
“Existing finished lots are pretty much gone and prices for lots have increased enough that starting new to be built lots is becoming another option in well located markets. I think the general sense is that we have reached bottom and more people are seeing a more positive market.”
“We are somewhat optimistic for decent spring selling.”
“There seems to be a slight increase in market optimism. The national builders are starting to see a shortage of lots and land in class ‘A’ locations, although this has not yet resulted in higher prices.”
“I am cautiously optimistic. Florida still has steady stream of foreclosures and we have to compete with them.”
“Prospects are calling and signing up at the same pace as before Katrina (pre- 2005). Lot prices are stabilizing as well as house prices. We have 12 sales on the board versus 3 last year at same time. Lot inventory in our company is gone and now buying as we need. Mortgage processing is driving prospects to existing housing since they have to do double work on new construction due to expiring documents in 90 day and 120 day term on verifications, credit reports, and appraisals.”
“It was our best first quarter since 2006, with significant progress in move up housing – people/families who have been on the bench for the past 4 years.”
“Appraisal and underwriting standards and still onerous and frustrating many potential buyers going through the process.”
“It will be the strongest spring we have seen in 5 years. Investors are beginning to come back.”
“Buyers seem more qualified and we have been seeing first time visitors sign the contracts.”
“I am primarily in the Inland Empire of Southern California. We sold a couple of homes very quickly in the last month. I am getting a little more optimistic that there is some kind of market out here. The price levels are down substantially.”