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Confidence of Builders Continues to Grow in May
Builder confidence in the market for newly built, single-family homes climbed for a second consecutive month in May to the highest level since last September, according to the NAHB/Wells Fargo Housing Market Index (HMI), which was released on May 18. This month’s HMI rose two points to 16.
"Builders are responding to what they perceive to be some of the best home-buying conditions of a lifetime," said NAHB Chairman Joe Robson. "You're not likely to get a better deal in terms of mortgage rates than what's available right now. Combine that with today’s affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers, and you have a very appealing set of reasons to make a move."
"The fact that the May HMI continued to tick up from April's five-point increase confirms that last month’s improved confidence level was no fluke," added NAHB Chief Economist David Crowe. "This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."
Crowe also noted that the recently announced plan by the Department of Housing and Urban Development to enable home buyers to use the new $8,000 tax credit at the closing table is especially encouraging. "We appreciate Secretary Donovan's efforts to make the tax credit more useful to buyers by addressing the biggest hurdle to first-time purchasers — having enough cash for a suitable downpayment," he said.
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the 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 conditions as good than poor.
Two of the three HMI component indexes rose in May. The index gauging current sales conditions rose two points to 14, and sales expectations for the next six months rose three points to 27. Traffic of prospective buyers remained unchanged from the prior month, registering 13.
Regionally, builder confidence climbed three points to 18 in the Northeast, one point to 18 in the South and four points to 12 in the West. The Midwest held even at 14.
 Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit — including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
 Want to Know the Housing Starts Through 2017?
Find out in HousingEconomics.com's Long-Term Forecast.
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To learn more, visit www.housingeconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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
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