Nation's Building News Online

Builders Upbeat This Holiday Season

Noting a strong finish to a record-breaking year for home sales, builder confidence in the new-homes marketplace remained unchanged in December from an upwardly revised reading of 70 in November, according to NAHB’s monthly Housing Market Index (HMI).

“Buyer demand is holding up well this holiday season, and single-family builders are pleased to be ending the year on such a high note,” said NAHB President Kent Conine.

“Looking forward, builders remain quite optimistic but are expressing some concern about the possibility of higher interest rates as the economic expansion continues,” said NAHB Chief Economist David Seiders. That decline was responsible for some slippage in the future expectations component of the index in December.

NAHB is projecting that rates on long-term mortgages will rise gradually in 2004, approaching 6.5% by mid-year.

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The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months as “good,” “fair” or “poor.” They are also asked to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for responses to each component are used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.

The component of the index gauging current sales activity slipped a single point to 77 in December, while traffic of prospective buyers rose four points to 51 following a temporary dip in November. Sales expectations for the next six months declined five points to 76 following extraordinarily high readings in October and November.
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