Builder confidence in the market for newly built, single-family homes declined one point to 15 in January on continuing concerns about the poor job market and large number of foreclosed homes for sale, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). "At this point, home builders have done everything we possibly can to set the stage for a housing recovery – we’ve thinned our inventories, we’ve kept new construction to a minimum, and we’ve fought for and achieved a great new buying incentive with the extension and expansion of the home buyer tax credit," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.
"We stand poised and ready to deliver new homes as soon as our customers are ready to take advantage of the tax credit and other historically good buying conditions in terms of interest rates, selection, and prices. Yet builders also realize that factors beyond our control–including consumer concerns about job security and competition from foreclosed homes on the market–are still impeding demand for new homes at this time."
"Home buying conditions have rarely been as good as they are right now, but consumers are still waiting to see significant positive signs of improvement in employment and confidence, and this is slowing buyers’ return to the market," agreed NAHB Chief Economist David Crowe. "Meanwhile, competition from foreclosed homes is also severely impacting new-home sales. That said, expected improvement in the job market this spring will help propel the housing recovery as we head into the prime home buying season."
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 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.
The January HMI fell one point to 15, its lowest point since June of 2009. Two of its three component indexes registered one-point declines, with the index gauging current sales conditions and the index gauging traffic of prospective buyers falling to 15 and 12, respectively. The index gauging sales expectations in the next six months held even, at 26.
The HMI edged down by a single point in three regions, with the Northeast falling to 22, the Midwest down to 11 and the South declining to 16. The HMI fell three points in the West, to 16.
For more information, visit www.nahb.org/hmi or www.housingeconomics.com.