Builders Sense Tide Is Turning for Housing Demand
Heading into the holidays, builders of new single-family homes continue to believe that the worst of the downswing in home buying is behind them, according to the NAHB/Wells Fargo Housing Market Index (HMI) for December. At 32 for the present month, the overall HMI is down a single point from November but remains above the recent low of 30 in September.
“This was the third consecutive month in which builder expectations for sales over the upcoming six-month period have improved, and it’s a good sign of things to come in the new year,” said NAHB President David Pressly.
“The HMI has come off September’s low point, and other recent indicators confirm that buying conditions have improved and that demand is stabilizing — including improvements in measures of housing affordability, strengthening consumer assessments of home buying conditions and an upswing in applications for mortgages to buy homes,” said NAHB Chief Economist David Seiders. “Builders sense that the tide is turning in terms of buyer demand for their product and are feeling somewhat better about the prospects for home sales.”
Seiders noted that the recent stabilization of home buyer demand largely reflects reductions in mortgage interest rates since mid-year, the retreat of energy prices from record highs and maintenance of solid growth in employment and household income. Reductions in home prices and widespread sales incentives offered by builders also have helped to buoy buyer demand.
Derived from a monthly survey that NAHB has been conducting for 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. Any number on the seasonally adjusted index over 50 indicates that more builders view sales conditions as good than poor.
Of the index’s three components, only the traffic of prospective buyers registered a decline this month, returning to its October level of 23 following a three-point jump in November. The component gauging current single-family home sales remained even at 33, up slightly from its recent low, while the component gauging sales expectations for the next six months rose three points to 48 — its third consecutive monthly gain.
Regionally, the HMI posted the biggest gain this month in the Midwest, which posted a seven-point gain on the confidence scale after displaying the greatest weakness on the index for many months. The Northeast was unchanged at 37, the South dropped a point to 39 and the West declined four points to 31.
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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.