Builders Gain Confidence in Prospects for Home Sales
Builder confidence in the housing marketplace has continued to rise this month, according to the NAHB/Wells Fargo Housing Market Index (HMI), which registered 40 for February, up from 35 in January and a low of 30 last September. The index now stands at its highest level since June 2006.
"Builders are still cautious as they continue to manage their inventory, but their view of the demand side of the single-family market is improving," said NAHB President Brian Catalde. "Every component of the February HMI — present home sales, sales expectations for the next six months and buyer traffic — showed a significant positive uptick in February."
"The HMI results are consistent with Federal Reserve Chairman Ben Bernanke's comment to Congress this week that there are signs of stabilization on the demand side of the housing market," said NAHB Chief Economist David Seiders.
Lower energy prices, favorable mortgage rates and solid growth in employment and household income have all contributed to the recent stabilization of home buyer demand, Seiders added. "In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand."
The HMI is derived from a monthly survey that NAHB has been conducting for 20 years. Any index number over 50 indicates that more builders view sales conditions as good than poor.
On this month’s HMI, the component gauging single-family home sales rose six points to 42; traffic of prospective buyers increased five points to 31; and sales expectations for the next six months climbed seven points to 55. This is the first time that sales expectations have gone beyond the 50 threshold since last June.
"Builders are becoming increasingly convinced that the abrupt downslide in home sales is in their rear view mirrors and they see better times as they look at the road ahead," said Seiders.
February’s HMI rose in all four regions of the country, with the Northeast gaining the most ground with an eight-point increase to 46. Five-point gains were registered in the Midwest and South, to 29 and 46, respectively, while the West moved up two points to 35.
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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 the 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.