June 18, 2013

Doors open for new Maine housing

A surge in new-home permits and rising demand on the coast give builders in Maine more confidence than they've had in years, mirroring the national trend.

By J. Craig Anderson canderson@pressherald.com
Staff Writer

(Continued from page 1)

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Larry Duell of Father and Son Builders, Inc. in front of a home the company recently built on Captain Thomas Road in Ogunquit on Monday, June 17, 2013. For the first time in seven years, most U.S. homebuilders are optimistic about home sales.

Shawn Patrick Ouellette/Staff Photographer

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Derived from a monthly survey that the association has been conducting for 25 years, the Housing Market Index gauges builders' perceptions of current single-family home sales -- and expectations for the next six months -- as good, fair or poor.

The survey also asks builders to rate traffic of prospective buyers as high, average or low. Scores from each component are used to calculate a seasonally adjusted index. Any number above 50 indicates that more builders view conditions as good than poor.

Improvements in the market for existing single-family homes boost new-home sales. When the number of existing homes for sale decreases, the prices and demand for new homes increase.

Maine Association of Realtors data for April, the most recent numbers available, indicate the median price for an existing home increased 4.4 percent statewide from April 2012.

The number of home sales statewide increased by 13.7 percent, from 824 in April 2012 to 937 in April 2013, according to the association.

One possible driver of the growth in home sales is the low but rising average interest rate for a 30-year, fixed-rate mortgage, said industry analysts.

As of Monday, the average interest rate had risen to 3.98 percent, a 14-month high but still lower than interest rates in previous decades, according to Freddie Mac.

Analysts suggest another reason for the rebound in home sales is likely the entrance of large, institutional investors into the rental-home business since the national home foreclosure epidemic sparked by the widespread issuance of risky, sub-prime loans.

In April, the U.S. home ownership rate reached an 18-year low of 65 percent, according to the U.S. Census Bureau. Investors continued to buy up rental homes to capitalize on the unprecedented number of families that cannot qualify for a mortgage.

Duell said many of today's would-be home buyers are struggling to get financing in the aftermath of that crisis, and that hurdle must be overcome before the homebuilding industry can reach sales levels comparable to those before the housing crash.

"Financing is an issue that we're battling," he said.

J. Craig Anderson can be contacted at 791-6390 or at:

canderson@pressherald.com

Twitter: @jcraiganderson 

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Additional Photos

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Construction workers excavate a new home site off of Drowne Road in Cumberland. New home construction starts are on the rise as the economy makes its slow recovery.

John Ewing / Staff photographer

  


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