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Single-Family Builders Remain Upbeat in July
Builder confidence in the new single-family home market has held up this month to a level matching the strong average for the year as a whole, according to the latest NAHB/Wells Fargo Housing Market Index (HMI) released last week.
“Builders have every reason to remain confident in the single-family marketplace,” said NAHB President Dave Wilson. “While mortgage rates have risen slightly in recent weeks, financing conditions remain very favorable for families considering homeownership, and demand still outpaces the supply of new homes in many markets.”
July’s HMI reading of 70 was down two points from an upwardly revised reading in June.
“Upbeat builder attitudes point toward continuation of strong sales and starts of single-family homes in the months ahead,” said NAHB Chief Economist David Seiders. “Builders are, however, concerned about lot shortages and the high cost of land for development, especially in parts of the Northeast and West. Meanwhile, the relatively weak job market situation in the Midwest has had an impact on builder confidence in that part of the country.”
Derived from a monthly survey that NAHB has been conducting for approximately 20 years, the HMI index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers.
Any index score over 50 indicates that more builders view sales conditions as good than poor.
HMI readings in July show a modest decline in the current sales rating from 77 to 75 and a similar drop in sales expectations from 80 to 77. Builders’ assessment of traffic of prospective buyers remained unchanged from the previous month’s reading of 55.
Regionally, builder confidence dropped one point to 88 in the West and two points to readings of 69 in the Northeast and 75 in the South. A more significant decline was registered in the Midwest, where confidence fell six points to a relatively weak reading of 46.
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