The Official Online Weekly Newspaper of NAHB
Builder confidence in the new single-family home market has improved significantly this month with consumers rushing to take advantage of home buyer tax credits before they expire, according to results of the latest NAHB/Wells Fargo Housing Market Index (HMI), which was released on April 15.
The HMI for April surged four points to 19, its highest level since September of 2009, just prior to the expiration of the previous housing tax credit.
"Home builders reported some real improvement in current sales activity and traffic of prospective buyers through their model homes over the past month," said NAHB Chairman Bob Jones. "While we remain cautious about what future months will bring, it's great to have this positive momentum at the start of the spring home buying season."
"An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders' view of the marketplace in April," said NAHB Chief Economist David Crowe.
"Meanwhile,” Crowe said, “builders have a more neutral view of what may come in the next six months, and are very aware of the many factors that continue to drag on housing at this time — including the critical shortage of credit for new and existing projects, problems with inaccurate appraisals and the ongoing flow of foreclosed properties on the market. Greater economic growth, particularly in the job market, and the abatement of these housing issues are needed to help move home building to a more sustained recovery."
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index 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 conditions as good than poor.
The HMI component gauging current sales conditions rose by five points to 20 this month — its strongest gain since 2003 — while the traffic of prospective buyers was up a solid four points, to 14. The index gauging sales expectations in the next six months, on the other hand, rose only marginally, by one point, to 25, an indication of the continued guarded outlook of builders.
The Midwest and South each registered substantial HMI gains in April, rising five points to 15 and four points to 21, respectively. Confidence remained unchanged at 22 in the Northeast and dipped two points in the West to 13.
The 2010 Spring Construction Forecast Conference is now a two-hour webinar to be held from 2:00-4:00 p.m. EDT on Tuesday, May 18.
Mark Zandi, of Moody’s Analytics, and Chris Varvares, of Macroeconomic Advisers, will join NAHB Chief Economist David Crowe for a macro-level look at the state of the nation’s economy and its impact on housing.
To register, visit www.nahb.org/cfc.