May 18, 2009 - Builder
confidence in the market for newly built, single-family homes improved
for a second consecutive month in May to the highest level since
September of 2008, according to the National Association of Home
Builders/Wells Fargo Housing Market Index (HMI), released today. The
HMI rose two points to 16 this month. “Builders
are responding to what they perceive to be some of the best home buying
conditions of a lifetime,” said NAHB Chairman Joe Robson, a home
builder from Tulsa, Okla. “You’re not likely to get a better deal in
terms of mortgage rates than what’s available right now. Combine that
with the affordable prices, multitude of home choices and $8,000 tax
credit for first-time buyers that are now available, and you have a
very appealing set of reasons to make a move.” “The
fact that the May HMI continued to tick up from April's five-point
increase provides confirming evidence that the improved confidence
level was no fluke,” added NAHB Chief Economist David Crowe. “This
continued increase indicates that home builders feel we’re at or near
the bottom of the market and that positive signs lie ahead for builders
and potential home buyers, provided that builder access to production
credit significantly improves.” Crowe also noted
that recent announcements by the Department of Housing and Urban
Development that would enable home buyers to use the new $8,000 tax
credit at the closing table are especially encouraging. “We appreciate
Secretary Donovan’s efforts to make the tax credit more useful to
buyers by addressing the biggest hurdle to first-time purchasers –
having enough cash for a suitable down payment,” he said. Derived
from a monthly survey that NAHB has been conducting for more than 20
years, the NAHB/Wells Fargo HMI gauges builder perceptions of current
single-family home sales and sales expectations for the next six months
as “good,” “fair” or “poor.” The survey also asks builders to rate
traffic of prospective buyers as “high to very high,” “average” or “low
to very low.” Scores for each component are then used to calculate a
seasonally adjusted index where any number over 50 indicates that more
builders view conditions as good than poor. Two
out of three of the HMI’s component indexes rose in May. The index
gauging current sales conditions rose two points to 14, while the index
gauging sales expectations for the next six months rose three points to
27. The index gauging traffic of prospective buyers remained unchanged,
at 13. Regionally, the Northeast posted a three-point gain in
its HMI score, to 18, while the South posted a one-point gain to 18,
the West rose four points to 12, and the Midwest held even at 14. EDITOR’S NOTE:
The NAHB/Wells Fargo Housing Market Index is strictly the product of
NAHB Economics, and is not seen or influenced by any outside party
prior to being released to the public. HMI tables can be accessed
online at: www.nahb.org/hmi. More information on housing statistics is also available at: www.housingeconomics.com.
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