Home Builder Confidence in Holding Pattern at 6 Year High

by devteam February 19th, 2013 | Share

According to the NationalrnAssociation of Home Builders (NAHB), its NAHB/Wells Fargo Housing Market Indexrn(HMI) for February was virtually unchanged as builders experience uncertaintiesrnabout the economy.  The Index, arnreflection of home builders’ confidence in the housing market, declined onernpoint from January’s level to 46. </p

NAHB surveys its residentialrnbuilders monthly as to their impressions of the single-family home market on threernparameters; current home sales, builders’ expectations for sales over the nextrnsix months, and the current level of buyer traffic.  The first two can be rated as “good,” “fair,”rnor “poor”, the last asrn”high to very high,” “average” or “low to very low.” Scores from each componentrnare then used to calculate individual seasonally adjusted indices and arncomposite index.  Any index number abovern50 indicates that more builders view conditions as good than poor.</p

Therncomponent measuring current sales conditions fell from 52 to 51. This was thernfirst component to break through the critical mid-point since the beginning ofrnthe recession and has remained there for three months.  The component measuring sales expectationsrnover the next six months was up one point to 50 but the indicator of buyerrntraffic fell four points to 32.</p

“Following solid gains over the past year, builder confidence hasrnessentially leveled out and held in the same three-point range over the lastrnfour months,” noted NAHB Chairman Rick Judson. rn”This is partly due to ongoing uncertainties about job growth andrnconsumer access to mortgage credit, but it’s also a reflection of the fact thatrnbuilders are now confronting rising costs for building materials and, in somernmarkets, limited availability of labor and lots as demand for new homes strengthens.”</p

“Having risen strongly in 2012, the HMI hit a slight pause in the beginningrnof this year as builders adjusted their expectations to reflect the pace atrnwhich consumers are moving forward on new-home purchases,” observed NAHB ChiefrnEconomist David Crowe. “The index remains near its highest level since May ofrn2006, and we expect home building to continue on a modest rising trajectoryrnthis year.” </p

Three-month moving averages for each region’s HMI score were mixed inrnFebruary, with the Northeast up three points to 39 and the West up four pointsrnto 55 and the Midwest and South each down two points, to 48 and 47,rnrespectively.

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About the Author


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

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