Builder Confidence in Housing Market Thins in April
In the face of rising mortgage rates, continued housing affordability issues and subsiding demand from investors and speculators, the NAHBs/Wells Fargo Housing Market Index (HMI) has moved down four points this month to an overall reading of 50.
“Home builders definitely view this as something of a transition period, where demand from speculators is easing off and the market is heading to a more sustainable level of activity following the record-breaking performance of 2005,” said NAHB President David Pressly. “This process should help restore a healthier balance between supply and demand going forward.”
“With mortgage rates back up to the 6.5% range and serious affordability issues in the highest-priced markets, today’s HMI numbers are neither surprising nor alarming,” noted NAHB Chief Economist David Seiders. “Indeed, a reported reduction in home buying by investors/speculators in the market for new single-family homes is a positive development. Furthermore, we expect solid growth in employment and household income to essentially offset the minor increases in the interest-rate structure that we’re projecting for the balance of this year.”
Derived from a monthly survey that NAHB has been conducting for nearly 20 years, the index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor.
All three component indexes have slipped this April, with the largest decline registered in current single-family sales, which dropped five points to 54. Sales expectations declined four points to 58 and prospective buyer traffic was off one point at 39.
Builders in the West actually registered rising confidence in market conditions in April, with a four-point gain to 70 partially offsetting a significant decline in March. But other regions of the country were heading in the opposite direction: the Northeast posted a seven-point decline to 49, the South fell four points to 55 and the Midwest, the weakest part of the country, shed five points, weighing in with a thin confidence reading of 32.
Where Are the Top 100 Metropolitan Areas for 2006?
“HousingEconomics Online,” the online publication from the NAHB Economics Group, is your single source for market analysis, forecasts, housing statistics and more. In-depth analysis, detailed Excel tables and overviews are available for all metro forecasts.
To learn more or subscribe to “HousingEconomics Online”, visit www.housingeconomics.com.
Attend the Spring Construction Forecast Conference in April
Plan to attend NAHB's Construction Forecast Conference on April 27 at the National Housing Center in Washington, D.C. The conference brings together the nation's premier housing economists and finance experts for an in-depth examination of the economic outlook for the housing industry.
For more information, visit www.nahb.org/cfc.
Seiders Predicts 'Soft Landing' on the NAHB Economics Blog
NAHB Chief Economist David Seiders says a "soft landing for housing is still in the cards" on NAHB's economics blog, “Seiders on Housing” — an informal Internet-based forum dealing with economic issues, housing trends, survey research and other topics affecting the housing sector of the economy.
Log onto the blog at http://nahbblog.blogs.com and get direct access to Seiders' expert opinions, projections and responses. Then let Seiders know what you think by giving your perspective.