Southeastern housing contacts continued to report sales gains in November. The majority of brokers and home builders indicated that sales were slightly ahead of the year-earlier level (see the chart).
Brokers and builders indicated that home inventories remained below the year-earlier level in November. Atlanta Fed broker contacts indicated that listing inventories are low in many parts of the Southeast (see the chart) and held back sales by some accounts:
- An Atlanta broker said, "The trends toward recovery of the housing market may be slowed or stalled by the low inventory. I don't expect to see inventory levels go up until sales prices start to rise significantly."
- According to a Tampa broker, "REO inventory has been extremely low."
- A northeast Florida contact reported that "the months of on-hand inventory continues to decrease and is currently below six months in all areas where I do business. I am experiencing multiple offers on many properties."
- An eastern Tennessee broker stated that "[The] new housing market is stagnant due to no inventory financing for builders. Demand strong, inventory none."
Most contacts continued to report that home prices rose in November and indicated that prices rose modestly compared with a year earlier (see the chart).
Looking ahead to 2013, most southeastern brokers and builders anticipate home sales will increase modestly compared with 2012 levels (see the chart).
Despite expectations of more home sales activity in 2013, most southeastern builders and brokers plan to keep employment levels steady in the first quarter of 2013 compared with fourth quarter 2012 levels (see the chart).
This expectation seems reasonable based on the last few months of employment data for the real estate and construction sectors in the Southeast, as reported by the U.S. Bureau of Labor Statistics (see the chart).
With that said, it is slightly surprising that business contacts do not have expectations for at least modest increases in the number of employees in early 2013. Many industry analysts, including the chief economist of the National Association of Home Builders (who addressed the topic in a recent blog post), have noted that they expect "significant gains in construction sector employment" given the steady increases in home sales, declines in inventory, and stabilization/rise in home prices.
Moreover, the Southeast has been shedding fewer construction jobs over the last few months and has even started to gain some real estate jobs when looking at the year-over-year change in real estate and construction employment numbers (see the chart). This trend suggests that this region might be poised for some gains in real estate and construction employment early next year.
Perhaps the situation with construction employment simply boils down to a comment recently made by a real estate developer contact: "Capacity is lacking in all trades throughout the homebuilding process, which has limited how quickly production can be increased. Such capacity issues are always largest on the front end of the recovery. It is likely that labor will fill in at a quicker pace as the recovery picks up more steam."
Note: November poll results are based on responses from 60 residential brokers and 30 homebuilders and were collected December 3–12, 2012. The housing poll's diffusion indexes are calculated as the percentage of total respondents reporting increases minus the percentage reporting declines. Positive values in the index indicate increased activity while negative values indicate decreased activity.
By Whitney Mancuso and
Jessica Dill, senior analysts in the Atlanta Fed's Research Department