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New Construction is Increasingly Lucrative

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Everything Real Estate in the San Fernando Valley
Wednesday September 16, 2020
New Construction is Increasingly Lucrative

A confidence index measures a group of people’s optimism or pessimism about a future subject. While confidence indexes aren’t dispositive, there is a certain element of self-fulfilling prophecy at work in them; when a confidence index is up, business is generally good. With that baseline information, the confidence index for home builders is through the roof (see what we did there?), despite ongoing concerns about the overall health of the economy during this pandemic. As such, it may be a good idea to hop on board the hype train and make a profit while the market is hot.

According to the National Association of Home Builders (“NAHB”), the September 2020’s Monthly confidence Index set a new record at 83; this is the highest it has been since they began measuring it 35 years ago. A useful rule-of-thumb is that scores above 50 are good, and the score was below 50 in April and May of 2020; people are becoming significantly more optimistic about the state of the new construction business.

Other indicators suggest a strong new construction market as well; measures of expectations for prospective buyer traffic hit an all time high of 73, measures of expectations for future sales hit 84, and the index of current single-family home sales increased to 88. Finally, given the severe shortage of homes for sale, it makes sense that people looking to buy homes during an era of record low mortgages would consider simply building a new home; all of this bodes very well for new construction projects.

At the Chernov Team we understand that knowledge is power, and knowledge of what areas of the housing market are particularly robust is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.


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