Nation's Building News Online

Index Finds Builders in Good Holiday Spirits in December, Especially Out West

The nation’s home builders are in good holiday spirits this December, maintaining the same high level of confidence they voiced during the preceding two months, according to the NAHB/Wells Fargo National Housing Market Index (HMI). A new regional breakout of the HMI data also reveals that builders in the West tend to be the most optimistic of all.

The December HMI edged up slightly to a reading of 71 this month, indicating that builders’ positive assessment of the housing market has held firm for the last three months.

“Builders have every reason for good cheer this holiday season,” said NAHB President Bobby Rayburn. “The bottom line is that buyer demand continues to keep builders busy and, like most business owners, builders are happiest when we’re busy.”

“On a nationwide basis, the final quarter of 2004 has been a good one for home builders,” agreed NAHB Chief Economist David Seiders. “Indeed, the average HMI was up several points for the quarter, reflecting excellent financing conditions, rising home prices and an improving economy.”

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Derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years, the index reports ratings on current sales of single-family homes, prospects for sales in the next six months and traffic of prospective buyers. A new addition to the HMI this month is a seasonally adjusted regional component measuring builder confidence in each of the four Census regions.

In December, the HMI component gauging current single-family sales remained unchanged at 77; expectations for sales in the next six months were up one point to 81; and buyer traffic rose three points to 52.

Regional scores were 80.1 in the West, 76.1 in the South, 71.9 in the Northeast and 56.7 in the Midwest.

Any number over 50 indicates that more builders view sales conditions as good than poor.

“The Midwest’s relatively weak showing presumably reflects builder perceptions of the area’s relatively weak job market, which has lost one million jobs since mid-2000 and only started picking up again in the last two quarters,” said NAHB’s Seiders. “However, the impact of job losses on the housing market has been softened by historically low mortgage rates.”
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