Figures released by the US Department of Commerce reveal that US new home sales are the best that they have been in two years. Does that mean that it is time to invest in home builders? There are many potentially profitable real estate investing products. Figures indicate that the number of home available post bankruptcy is falling so that there is less competition for new home sales. Also part of the economic boost from Federal Reserve bond purchases is likely to go into new housing. Interest rates will be low for the foreseeable future. If you are going to invest in home builders look at results by region as the slowly improving economy is somewhat localized. Sales in the South fell in the last month while sales in the Northeast rose.
Regional Differences
Interest rates are low everywhere but jobs especially good paying jobs are not always evenly dispersed across the nation. Salaries are typically higher in the North and Northeast than in the South and Southeast. Even with low interest rates buyers need to qualify for their mortgages. Those who would like to invest in home builders should look at who operates in which region of the country before buying stock.
What Do the Numbers Mean?
New home sales are counted when a couple signs a contract to build the home or purchase a newly built home. This contrasts with the tabulation of closings on older homes. The newly released figures are from two months ago. This was before the Fed announced its bond buying economic stimulus program. Perhaps the time to invest in home builders is now, before new numbers come out and prices go up. Already there has been an increase of more than twenty-five percent in new home sales since a year ago. As home builders have cut back in the last couple of years there is also a relative scarcity of new homes for sale. As prospects for a better market evolve sales may well go substantially higher making it smart to invest in home builders today and not after a housing boom is apparent.
Real Estate Investment
If you invest in home builders is that how to start investing in real estate? One can also consider flipping properties as prices rise or investing in the rental market. Real estate management can garner profits for the smart investor. Then there are lease options as well. A smart investor can make money in mobile homes while the housing market grows. Land trusts and real estate limited partnerships are also potential investment opportunities. Learning how to invest in real estate as the market turns up may be profitable and you will not only invest in home builders but consider the whole range of real estate investment options.
As always with these articles we are not suggesting that one invest in any specific home builder or that one invest in home builders at all. The point is to be aware of investment opportunities as the recession lightens and find profitable places to invest your hard earned money.