Builders of new single family homes
continue to grow more confident about the market for their product according to
the National Association of Home Builders (NAHB)/Wells Fargo Housing Market survey
for December. The Housing Market Index
(HMI) derived from the survey rose two points to 47 marking the eighth
consecutive monthly gain and the highest level for the index since April 2006.
The HPI and its component indices are
based on responses of NAHB's home builder members to a series of questions on new
home sales activity. They are asked to
gauge the current level of single family home sales and their expectation for
sales over the next six months each on a scale of "good,"
"fair" or "poor" and to rate traffic of prospective buyers
as "high to very high," "average" or "low to very
low."
Scores from each component are then used
to calculate an index and combined into a seasonally adjusted composite (the
HMI). A number over 50 for the index or
any of its components indicates that more builders view sales conditions as
good than poor.
Two of the HMI's three component indexes
are now above the critical midpoint of 50. The component gauging current sales
expectations rose two points to 51 in December, while the component gauging
sales expectations in the next six months slipped one point, to 51. The
component measuring traffic of prospective buyers increased one point, to 36.
"Builders across the country are
reporting some of the best sales conditions they've seen in more than five
years, with more serious buyers coming forward and a shrinking number of vacant
and foreclosed properties on the market," observed NAHB Chairman Barry Rutenberg. "However, one thing that is still holding
back potential home sales is the difficulty that many families are encountering
in getting qualified for a mortgage due to today's overly stringent lending
standards."
"While there is still much room for improvement, the consistent upward
trend in builder confidence over the past year is indicative of the gradual
recovery that has been taking place in housing markets nationwide and that we
expect to continue in 2013," noted NAHB Chief Economist David Crowe.
The increase in confidence was evidenced in three of the four regions with the
fourth, the West, unchanged from November at an index of 47. The HMI increased three points to 46 in the
South, three points to 48 in the Midwest, and four points to 35 in the
Northeast. The levels in each region are
up a minimum of 100 percent compared to one year earlier