Increased Sense of Urgency Amongst Home Buyers Sends Builder Confidence Higher

by devteam May 15th, 2013 | Share

Builder confidence has perked uprnagain.  After dropping three points inrnApril to 41, the National Association of Home Builders (NAHB)/Wells FargornHousing Market Index (HMI) rebounded to 44 this month, reflecting improvementrnin all three of its component measures.</p

“Buildersrnare noting an increased sense of urgency among potential buyers as a result ofrnthinning inventories of homes for sale, continuing affordable mortgage rates</aand strengthening local economies," noted National Association of Home Buildersrn(NAHB) Chairman Rick Judson. "This is definitely an encouraging sign evenrnamidst rising challenges with regard to the cost and availability of buildingrnmaterials, lots and labor."</p

The HMI is derived from responses to three questions in a monthly surveyrnconducted by NAHB among its new home builder members.  Participants are asked to gauge both current salesrnand sales expectations over the next six months as “good”, “fair”, or “poor,”rnand to rate the current traffic of prospective buyers as “high to very high,”rn”average” or “low to very low.” Scores for each component are then used torncalculate a seasonally adjusted index.  Arnnumber over 50 for the composite of any of the components indicates that morernbuilders view conditions as good than poor.</p

The component measuring currentrnsales conditions increased four points to 48 and the one gauging future salesrnincreased one point to 53, the highest level since February 2007.  Prospective buyer traffic was rated at a 33 comparedrnto 30 in April.</p

“While industry supply chains will take time to re-establish themselvesrnfollowing recession-related cutbacks, builders’ views of current salesrnconditions have improved and expectations for the future remain quite strong asrnconsumers head back to the market in force,” said NAHB Chief Economist DavidrnCrowe.</p

Three of the four regions showed no movement along the three month movingrnaverages of their composite scores.  ThernNortheast remained at 37, the Midwest at 45, and the South at 42.  The West dropped six points to 49

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