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Housing Stimulus Improves Builders' Outlook for Sales
Anticipating the positive impact of the newly enacted housing stimulus legislation, the outlook of single-family home builders for home sales in the next six months showed some improvement in August’s NAHB/Wells Fargo Housing Market Index (HMI), which was released on Aug. 18.
While the overall confidence measure held steady at 16, the component gauging sales expectations rose two points to 25.
“With the passage of crucial housing legislation last month that created an attractive home buyer tax credit, there is a sense that home sales may soon be reaching a turning point,” noted NAHB President Sandy Dunn. “Builders are anticipating the stimulative effects of this legislation and are optimistic that the tax credit will give those buyers who’ve been sitting on the fence the reason they need to jump back into the market.”
The Housing and Economic Recovery Act of 2008, signed into law by President Bush on July 30, implemented several critical reforms to the housing finance system, provided aid to troubled home owners facing foreclosure and created a temporary $7,500 tax credit for first-time home buyers who meet certain income requirements. NAHB has developed a Web site at www.federalhousingtaxcredit.com to promote the tax credit and answer commonly asked questions about it.
“While our overall measure of builder confidence remains at a record low at this time, it is a good sign that two out of three of the HMI’s component indexes rose in August, and this may be an indication that we are nearing the bottom of the long downswing in new-home sales,” said NAHB Chief Economist David Seiders. “Our current forecast shows stabilization of sales during the second half of this year, followed by solid recovery in 2009 and beyond.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the HMI gauges builder perceptions of current single-family home sales, sales expectations for the next six months and traffic of prospective buyers. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
In the August HMI, the index on current sales conditions climbed one point to 16, while the measure of prospective buyer traffic remained unchanged at 12.
Regionally, the Northeast and Midwest each posted gains in builder confidence, with the Northeast up two points to 16 and the Midwest up four points to 14. The South remained unchanged at 20, and the West, whose new-homes market has been heavily impacted by an upswing in foreclosure sales at cut-rate prices, posted a decline of three points to 11.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
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.
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