Builder confidence rises in SeptemberMortgagePress.combuilder confidence, HMI, Fannie Mae, Freddie Mac
Builder confidence in the market for newly built single-family
homes rose for the first time in seven months this September,
according to the National Association of Home Builders/Wells Fargo
Housing Market Index (HMI), released recently. The HMI gained two
points to 18, rising from its record low of the previous two
"Builders have several reasons to be more optimistic at this
time," noted NAHB President Sandy Dunn, a home builder from Point
Pleasant, W.Va. "Many are sensing that home sales are nearing a
turning point with the support of the newly enacted first-time
homebuyer 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."
Following the Treasury Department's announcement that it was
placing mortgage giants Fannie Mae and Freddie Mac into
conservatorship last week, the average rate on 30-year fixed-rate
conforming home mortgages declined by nearly half a percentage
point, falling to below six percent 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 have put
additional downward pressure on prime conforming mortgage
"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 percent 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 NAHB/Wells Fargo HMI gauges builder
perceptions of current single-family home sales and sales
expectations for the next six months as "good," "fair" or "poor."
The survey also asks builders to rate traffic of prospective buyers
as "high to very high," "average" or "low to very low." 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. The indexes gauging current sales conditions and traffic
of prospective buyers were each up a single point, to 17 and 14,
respectively. Meanwhile, the index gauging sales expectations for
the next six months rose by six points, to 30—which was four
points higher than its year-ago level.
All regions also posted some degree of 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.
For more information regarding housing statistics, visit www.housingeconomics.com.