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Rise in Builder Confidence Bodes Well for Spring
Continuing an upward trend that began in the final quarter of 2006, builder confidence rose two points to 35 in this month’s NAHB/Wells Fargo Housing Market Index (HMI), its highest level since last July.
“Builders are responding to increased buyer interest at the end of 2006 and beginning of 2007,” said NAHB President David Pressly. “This bodes well for the upcoming spring buying season.”
“The same factors that were evident at the end of 2006 continue to hold true in today’s housing market — improving affordability measures, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes,” said NAHB Chief Economist David Seiders. “Builders are starting to see that the worst is behind them and that buying conditions have improved to the point that greater optimism is warranted.”
Seiders added that the recent stabilization of home buyer demand largely reflects reductions in mortgage interest rates since mid-year, lower energy prices following record highs and solid growth in employment and household income. Reductions in home prices and widespread sales incentives offered by builders also have helped resuscitate buyer demand.
Derived from a monthly survey that NAHB has been conducting for 20 years, the NAHB/Wells Fargo Housing Market Index (HMI) gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three component indexes registered improvement in January, with current single-family home sales and the traffic of prospective buyers each gaining three points, climbing to 36 and 26, respectively. The index gauging sales expectations for the next six months remained unchanged at 49.
Confidence this month was up in the Northeast, at 39; the Midwest, 24; and the South, 41. In the West it remained at 32, unchanged from the previous month.
 Want to Know the Long-Term Forecast Through 2015?
Find out in HousingEconomics.com’s Long-Term Forecast.
HousingEconomics.com includes downloadable Excel tables featuring the housing starts forecast, GDP, demographics and more.
To learn more, visit www.housingeconomics.com.
 NAHB Kit Gives Builders Back-to-Basics Tips in Changing Market
With the current cooling of the nation’s housing market expected to persist into the middle of next year, NAHB has developed a comprehensive online toolkit geared to providing association members with information that will help them prosper in today’s changing business environment.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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