04/23/2024

New Home Market Remains Solid!

Hello Again - It’s all too easy to get the jitters about the economy when stocks slide for a few days right?  We suddenly start to wonder if the doom and gloomers on the internet might be right after all.   This here is my reminder to you that the demand for homes has not gone away, and that housing is critical to a healthy economy.  Not only have we under built housing in recent years for multiple reasons (including covid), but the high population of millennials continues to need and demand more and more homes.

PulteGroup is a large builder that trades on a stock exchange, therefore they have to release their performance data once per quarter.  We call this their “earnings release date”, and they typically comment on the economic environment when they do this.  (See story headline below)

Keep in mind that the ripple effect of home construction extends to the demand for goods and services. Families settling into new homes require furnishings, appliances, and other household items, stimulating local businesses. The NAHB estimates that the construction of an average single-family home generates around $90,000 in taxes and fees paid to local and state governments. These funds contribute to public services, such as schools and infrastructure, further enhancing the community's well-being.

Yes, interest rates are higher, and homeowners and builders have to price their homes accordingly to get them sold, but the actual under the hood demand for housing remains, which is positive for the economy as well as investors.

Best Regards, 

Mike

Barron article