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Builder Confidence Surges; Buyers "Serious and Committed"

by devteam June 15th, 2015 | Share

Builder’s demonstrated the highest confidence in the marketrnfor newly built homes in nearly a year this month as the Housing Market Indexrn(HMI) published by the National Association of Home Builders and Wells FargornBank sprung to a five point gain.  Two ofrnthe HMI’s component indices reached the highest levels in nearly a decade.  </p

The HMI rose to 59, the highest reading since September 2014rnin June as builders, according to NAHB Chairman Tom Woods, reported “morernserious and committed buyers at their job sites.”  This is reflected, Woods said “in recentrngovernment data showing that new-home sales and single-family construction arerngaining momentum.” </p

“The HMI indices measuring current and future sales expectations are atrntheir highest levels since the last quarter of 2005, indicating a growingrnoptimism among builders that housing will continue to strengthen in the monthsrnahead,” said NAHB Chief Economist David Crowe. “At the same time, buildersrnremain sensitive to consumers’ ability to buy a new home.”</p

The HMI is derived from a monthly survey conducted by NAHB among its builderrnmembers to measure their perceptions of current single-family home sales andrntheir expectations for those sales over the upcoming six months as “good,”rn”fair” or “poor.” The survey also asks builders to rate traffic of prospectivernbuyers as “high to very high,” “average” or “low to very low.” Scores for eachrncomponent are then used to calculate a seasonally adjusted index where anyrnnumber over 50 indicates that more builders view conditions as good than poor.  NAHB has conducted the survey for over 30rnyears.</p

All three components of the composite index posted healthy gains in June. Therncomponent gauging current sales conditions jumped seven points to 65 and thernindex charting sales expectations in the next six months increased six pointsrnto 69.  These were the highest readingsrnfor the components since November and October 2005 respectively.  The component measuring buyer traffic rosernfive points to 44, tied with January for the highest index reading this year.</p

Looking at the three-month moving averages for regional HMI scores, thernSouth and Northeast each rose three points to 60 and 44, respectively. The Westrnposted a two-point gain to 57 while the Midwest dropped by one point torn54. 

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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