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Builders More Confident About Single-Family Sales Outlook
Builder confidence in the market for newly built single-family homes has risen for the first time in seven months this September, according to the NAHB/Wells Fargo Housing Market Index (HMI), released on Sept. 16. The HMI was at 18, rising two points from its record low of the previous two months.
“Builders have several reasons to be more optimistic at this time,” noted NAHB President Sandy Dunn. “Many are sensing that home sales are nearing a turning point with the support of the newly enacted first-time home buyer tax credit. Meanwhile, with the government’s explicit backing of Fannie Mae and Freddie Mac now assured, this should help keep mortgage rates at very favorable levels going forward.”
In the week following the Treasury Department's announcement that it was placing mortgage giants Fannie Mae and Freddie Mac into conservatorship, the average rate on 30-year fixed-rate mortgages fell below 6% for the first time in several months. Market responses to the Lehman Brothers bankruptcy filing and the purchase of Merrill Lynch by Bank of America subsequently put additional downward pressure on prime conforming mortgage rates.
“Nearly half of the builders in our September survey indicated that they expect to see a positive impact from the tax credit in their market areas,” said NAHB Chief Economist David Seiders. “Of those respondents, 20% said their market has already experienced some of this effect. Meanwhile, consumer confidence has risen and more households are saying that now is a good time to buy a home. All of these factors, along with the recent downward movements in mortgage rates, suggest that new-home sales will be stabilizing in the final quarter of the year.”
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 the 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.
All three of the HMI’s component indexes registered gains in September, with current sales conditions and traffic of prospective buyers each up a single point, to 17 and 14, respectively. The index gauging sales expectations rose by six points, to 30, which was four points higher than its year-earlier level.
All regions of the country showed improvement in the September HMI, with the Midwest, South and West each up two points, to 15, 22 and 12, respectively, and the Northeast posting a six-point gain to 22.
 Attend the NAHB Construction Forecast Conference on Oct. 22
Don't miss NAHB's 2008 Fall Construction Forecast Conference and Webcast for the latest economic news about the housing industry.
Join NAHB on Oct. 22 in Washington, D.C., where the country’s leading economists and finance experts will provide insight into the uncertainties of the housing market.
To register for the conference or Webcast, and to see the full conference agenda, visit www.nahb.org/cfc.
 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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