Builders Say Prospective Buyer Traffic Best Since 2005

Builder confidence in the market for newly builtrnsingle family homes held steady in September after four consecutive months ofrnimprovements the National Association of Home Builders (NAHB) said today.  The Housing Market Index (HMI) it issuesrnjointly with Wells Fargo Title Insurance registered 58 in September unchangedrnfrom the month before.</p

Inrna survey NAHB has conducted for 25 years new home builders are asked to gaugerntheir perceptions of the current market for their product and theirrnexpectations for sales over the next six months as “good,”, “fair”, or “poor”rnand to measure current buyer traffic as “highrnto very high,” “average,” or “low to very low.” Scores from each component arernthen used to calculate a seasonally adjusted composite index where any numberrnover 50 indicates that more builders view conditions as good than poor.</p

While the component gauging currentrnsales conditions held unchanged at 62, the component gauging sales expectationsrnin the next six months declined three points to 65 and the component gaugingrntraffic of prospective buyers increased one point, to 47, the highest since October 2005.</p

The September Economic Forecast fromrnFannie Mae, also released today, noted the steady increase in builder sentimentrnas indicated by the NAHB survey.  FanniernMae’s economists stated that the four month run-up as of the August report flewrnin the face of declining new home sales reported by the Census Bureau andrnsuggested that either the builders somehow knew that the decline would be shortrnlived or the builders would soon reverse directions.  Did the three point drop in salesrnexpectations resolve that issue?</p

 “While builder confidence is holding at thernhighest level in nearly eight years, many are reporting some hesitancy on thernpart of buyers due to the sharp increase in interest rates,” said NAHB ChairmanrnRick Judson. “Home buyers are adjusting to the fact that, while mortgage ratesrnare still quite favorable on a historic basis, the record lows are probably arnthing of the past.”</p

“Following a solid run up in builderrnconfidence over the past year, we are seeing a pause in the momentum asrnconsumers wait to see where interest rates settle and as the headwinds of tightrncredit, shrinking supplies of lots for development and increasing labor costsrncontinue,” noted NAHB Chief Economist David Crowe.</p

All four regions posted gains inrntheir three-month moving average HMI scores in September, including a two-pointrngain to 41 in the Northeast, a four-point gain to 64 in the Midwest, arntwo-point gain to 56 in the South and a four-point gain to 61 in the West,rnrespectively.

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