Builder confidence in the market for newly built, single-family homes rose in May for the second consecutive month to its highest level in more than two years, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The HMI gained three points to 22 in May, its highest level since August 2007.
surveyed for the HMI at the beginning of May were undoubtedly reacting to the
heightened consumer interest they had just witnessed as the deadline for home
buyer tax credits arrived at the end of April,” said Bob Jones, chairman of the
National Association of Home Builders (NAHB) and a home builder from Bloomfield
Hills, Mich. “Builders are also hopeful that the solid momentum that the tax
credits initiated will continue even now that those incentives are gone.”
really encouraging part of today’s HMI is that sales expectations for the next
six months continued to gain, despite the expiration of the home buyer tax
credits at the end of April,” said NAHB Chief Economist David Crowe. “This
means builders are more comfortable that the market is truly beginning to
recover, and that positive factors for buying a new home – low interest rates,
great selection, stabilizing prices, and a recovering job market – are taking
the place of tax incentives to generate buyer demand.”
we still have a long way to go, and it’s worth repeating that continued
challenges such as the critical lack of project financing, inappropriate
appraisal procedures, competition from short sales and foreclosures, and the
soaring costs of some building materials are major obstacles on the path to a
healthier housing market and economy,” he added.
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.
Each of the
HMI’s three component indexes posted three-point gains in May. The component
gauging current sales conditions climbed to 23, its highest level since July of
2007. The component gauging sales expectations in the next six months rose to
28, its highest point since November 2009, and the component gauging traffic of
prospective buyers improved to 16, its best showing since September 2009.
also posted gains in every region in May. The Northeast, which has the smallest
survey sample and is therefore subject to greater month-to-month volatility,
rose 14 points to 35, its highest point since June 2007. The Midwest
posted a two-point gain to 17, while the South registered a one-point gain to
22, and the West posted a seven-point gain to 20.
can be accessed online at: www.nahb.org/hmi.
Builder confidence rises to highest level in 2 years
May 19, 2010