New home sales starting to rise

May 18, 2009 7:09:15 PM PDT
There are signs the dismal housing market could be improving. The National Association of Home Builders is seeing a growing sense of optimism about the industry.

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High atop a hill in Millbrae, construction workers are finishing two homes that have already been sold. Danville-based Braddock and Logan has plans for 37 homes at Millbrae Estates, starting at $1.5 million. Braddock and Logan says among its seven Bay Area developments, those in Vallejo and Dublin are the strongest.

"For the first time in a number of years we're seeing buyers that are interested in one home site, so multiple buyers looking to purchase the same home. Haven't seen that for quite awhile," says Tamara Wheeler from Braddock and Logan.

The National Association of Home Builders says while still at historically low levels, its index of builder sentiment rose in May to the highest level since September. Braddock and Logan credits low prices, low interest rates, tax credits, and shrinking inventory, as some builders abandon or postpone projects.

"New communities that might have been coming on more quickly, that process has slowed significantly," says Tamara.

The same factors appear to be driving improvements in the existing home market as well. San Francisco Summit Mortgage Corp. broker Michael Harrington says some buyers are surprised to learn they still have to compete when bidding.

"I think there are a lot of buyers who thought prices would go lower than they really have and the fact that now there is overbidding that is happening is something of a surprise to a lot of buyers," says Harrington.

Harrington says it is still a buyer's market, but the free fall might be over.

"I think we have hit bottom. I think we have hit the bottom and now we're bouncing along," says Harrington.

On Tuesday, the government releases its report on building activity for April; economists say if those numbers are good, that will be proof to go along with the improving builder confidence.

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