NAHB: Home builder confidence posts biggest gain in five yearsMortgagePress.comHome Builders/Wells Fargo Housing Market Index, National Association of Home Builders, Joe Robson
Builder confidence in the market for newly-built, single-family
homes rose five points in April to the highest level since October
2008, according to the latest National Association of Home
Builders/Wells Fargo Housing Market Index (HMI). This gain was the
largest one-month increase recorded since May of 2003, and brings
the HMI out of single-digit territory for the first time in six
months to 14. Every component of the HMI reflected the boost, with
the biggest gain recorded for sales expectations in the next six
months.
"If you're a potential buyer who's been sitting on the fence
waiting for a sign that now is the time to act, this is it," said
NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "Some of
the most favorable buying conditions in a lifetime are now in
place, and they are drawing more consumers back to the market."
"This is a very encouraging sign that we are at or near the
bottom of the current housing depression," said NAHB Chief
Economist David Crowe. "With the prime home buying season now
underway, builders report that more buyers are responding to the
pull of much-improved affordability measures, including low home
prices, extremely favorable mortgage rates and the introduction of
the $8,000 first-time home buyer tax credit."
Crowe cautioned, however, that a key issue that still must be
addressed is the ongoing lockdown on builder acquisition,
development and construction (AD and C) financing. "Restoring
health to our nations economy will require a substantial housing
recovery, and that recovery is contingent on breaking the logjam in
AD&C lending that presents an ever-increasing obstacle for home
builders," he said.
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 in 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
conditions as good than poor.
Each of the HMI's component indexes recorded substantial gains
in April. The largest of these gains was a 10-point surge in the
component gauging builder sales expectations for the next six
months, which brought that index to 25. The component gauging
current sales conditions and the component gauging traffic of
prospective buyers each rose five points, to 13 and 14,
respectively.
The HMI also rose in every region in April, with an eight-point
gain to 16 in the Northeast, a six-point gain to 14 in the Midwest,
a five-point gain to 17 in the South and a four-point gain to nine
in the West.
The NAHB/Wells Fargo Housing Market Index is strictly the
product of NAHB Economics, and is not seen or influenced by any
outside party prior to being released to the public. HMI tables can
be accessed online at: www.nahb.org/hmi. For more
information, visit www.nahb.com.
