Builder confidence in the market for newly built
single family homes held steady in September after four consecutive months of
improvements the National Association of Home Builders (NAHB) said today. The Housing Market Index (HMI) it issues
jointly with Wells Fargo Title Insurance registered 58 in September unchanged
from the month before.
a survey NAHB has conducted for 25 years new home builders are asked to gauge
their perceptions of the current market for their product and their
expectations for sales over the next six months as "good,", "fair", or "poor"
and to measure current buyer traffic as "high
to very high," "average," or "low to very low." Scores from each component are
then used to calculate a seasonally adjusted composite index where any number
over 50 indicates that more builders view conditions as good than poor.
While the component gauging current
sales conditions held unchanged at 62, the component gauging sales expectations
in the next six months declined three points to 65 and the component gauging
traffic of prospective buyers increased one point, to 47, the highest since October 2005.
The September Economic Forecast from
Fannie Mae, also released today, noted the steady increase in builder sentiment
as indicated by the NAHB survey. Fannie
Mae's economists stated that the four month run-up as of the August report flew
in the face of declining new home sales reported by the Census Bureau and
suggested that either the builders somehow knew that the decline would be short
lived or the builders would soon reverse directions. Did the three point drop in sales
expectations resolve that issue?
"While builder confidence is holding at the
highest level in nearly eight years, many are reporting some hesitancy on the
part of buyers due to the sharp increase in interest rates," said NAHB Chairman
Rick Judson. "Home buyers are adjusting to the fact that, while mortgage rates
are still quite favorable on a historic basis, the record lows are probably a
thing of the past."
"Following a solid run up in builder
confidence over the past year, we are seeing a pause in the momentum as
consumers wait to see where interest rates settle and as the headwinds of tight
credit, shrinking supplies of lots for development and increasing labor costs
continue," noted NAHB Chief Economist David Crowe.
All four regions posted gains in
their three-month moving average HMI scores in September, including a two-point
gain to 41 in the Northeast, a four-point gain to 64 in the Midwest, a
two-point gain to 56 in the South and a four-point gain to 61 in the West,