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US new home market on the rise

The latest figures for the US new home market offer good news for investors in land. Housing starts in February rose, particularly in the single-family-home sector. This combined with the highest builder confidence for over 11 years makes buying US land an attractive investment option this year.

Data released by the U.S. Department of Housing and Urban Development and the Commerce Department for the month of February show that the US new home market went up by 3%. This brings the year-on-year total of new starts to 1.288 million units. The number of new single-family homes rose by an impressive 6.5% in the year to reach 872,000 units.

Analysts believe that the February statistics may well set a trend for the US new home market generally this year. Commenting on the figures, the Chairman of the National Association of Home Builders (NAHB) Granger MacDonald said, “We should see single-family production continue to grow throughout the year”.

Builder confidence in the US new home market

Mirroring the rise in the number of new home starts in the US comes a marked rise in builder confidence. The monthly National Association of Home Builders/ Wells Fargo Housing Market Index (HMI) for March found that builders were the most confident they’d been since June 2005.

The HMI measures three criteria – current sales conditions, sales expectations and buyer traffic – and asks builders to gauge their confidence in each of them. The March HMI registers a total of 71/100, up 6 points on February and the highest level for almost 12 years.

US builders are particularly bullish when it comes to current sales conditions. Their confidence in this aspect of the US new home market rises by 7 points to 78. They also believe that buyer traffic is good with this criteria experiencing a rise of 8 points.

Restraints on the US new home market

Despite the rise in housing starts, US builders continue to experience restraints. One of the largest is the lack of available building land, a common problem in areas popular with new residents in America’s fastest-growing states. Florida is one of them, particularly in key areas such as the Southwest.

However, the shortage of vacant plots suitable for single-family homes isn’t the only problem facing US builders. “Builders continue to face a number of challenges, including rising material prices and higher mortgage rates,” said Granger.

Southwest Florida new home market

Busy tourism and an ‘economy firing on all cylinders’ make Southwest Florida a hotspot for property. The influx of population into the area has put further pressure on the already stretched property market in the area. According to Land Solutions, permits for single-family homes in Southwest Florida went up by 2.5% in 2016.

The company expects more demand in 2017. “Primary home demand from full-time residents will likely increase in the more affordable areas such as Cape Coral and Charlotte County as a whole,” says their Market Trends Southwest Florida Q4 2016. The same report forecasts increased demand from the secondary home market too now that concerns over the US economy have eased.

“The US new home market looks poised for a good year,” says Dies Poppeliers, Managing Director of BRIC Group. “This opens the door to investment opportunities in land in those areas with proven demand, both from new residents relocating to new jobs and from tourists.”

BRIC Group, an investment company specialising in global real estate opportunities, offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group is also developing The Coral resort, in Northeast Brazil, a luxury beachfront resort with land and villa investment opportunities. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.

Invest in the US new home market now

(Source: NAHB, Land Solutions)

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