New home sales in the U.S. were the third-highest ever recorded in September, and sales of previously owned homes hit an all time high — the third month in a row that record high sales were recorded.
The strong housing market is being credited with helping spur a nationwide economic recovery. Interest rates in the range of 6.15% to 6.26% are a primary factor.
“The market remains strong,” said Marty Milstead, executive director of the Homebuilders Association of Mississippi. “Homebuyers are responsive to the lower interest rates. I think everybody is still doing very well. We haven`t really seen any slowdown. The economy is holding up pretty well in Mississippi. We’re seeing the stock market rallying back. There are a lot of good things going on.”
One of the biggest issues continues to be the affordability of housing — particularly for working families. Milstead said with issues such as high costs for lumber and land, affordability is a major challenge.
Typically home construction slows at this time of year because people have other things on their mind during the holidays. But this year activity has remained stable because of the low interest rates, says Homebuilders Association of Mississippi President Charles Porter, who is president of Porter Construction Inc., Jackson.
“Right now if anything is slowing us down it is the lumber prices and OSC (oriented strand board plywood) prices,” Porter said. “We’re just hoping prices will go down. It is a supply and demand issue. The U.S. government tariffs on Canadian lumber drive prices up. That has had some effect. And the federal government has bought a lot of plywood products to send to Iraq for reconstruction. There are a lot of different influences on the lumber market that cause prices to go up. But typically this time of year prices go down because demand slows. So prices should come down.”
Porter said Canadian lumber tariffs can increase the price of a home by $1,500 to $2,000.
The future outlook for homebuilding in Mississippi is good as long as interest rates remain favorable.
“The lower interest rates make the houses more affordable to a wider range of people,” Porter said.
Growth areas of the state are North Mississippi, the Rankin County-Madison area, and the Coast.
“Metro Jackson and Madison County continue on fast pace with home sales activity,” said Mark S. Jordan, a real estate developer who is owner of Mark S. Jordan Companies in Madison. “The trends will run through the winter season and continue easily throughout 2004. If there is a problem, it is in production, which affects delivery, which compounds the demand that much more. You can`t build houses fast enough to meet the demand for well-built houses. We’re in a growth area. The new Nissan plant has had an impact.”
Jordan reports that in Metro Jackson, all price range of houses are selling well.
“All neighborhoods are receiving their market share,” he said.
While the growth in DeSoto County, Metro Jackson and the Coast is positive, Jordan said the gains in those urban areas are rural Mississippi`s loss. Rural areas continue to lose population as people move to the urban areas where jobs are more plentiful.
Clay Easterling, president of Homebuilders Association of Mississippi Gulf Coast and owner of Easterling Enterprises, said that homebuilding is very strong right now across the whole Coast.
“The market is great for new home construction,” Easterling said. “It has been steady all year. Normally we will have little dips and valley in starts. It hasn`t been like that this year. It has been very steady. Remodeling has been strong because the interest rates have remained good. There are a lot of additions, and some people are remodeling the entire home. People are refinancing at low rates and putting the money back in their home.”
Home building activity in Northeast Mississippi has remained steady, too, says Shelley Schitke, executive director, Home Builders & Remodelers Association of Northeast Mississippi.
“There is not a lot of spec building, but still it is steady,” Schitke said. “Most of the building going on is custom building. Some people are moving up and some empty nesters may be downsizing a bit, but going more upscale. They may have smaller square footage, but have added more amenities. They are downsizing the house and the yard, too, possibly, but they are adding more upscale amenities such as a Jacuzzi.”
Schitke is also seeing strong interest in remodeling and upgrading homes. She said that follows a national trend towards baby boomers reinvesting in their homes after their children grow up and leave.
“That is happening a lot everywhere,” Schitke said. “And in some cases we are talking major remodeling. That is going to be the trend with the baby boomers. Baby boomers have more money when their kids are grown and gone, and are reinvesting it in their homes.”
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.