MARKETPLACE

Builder Confidence Remains Unchanged In April
Builder confidence in the market for new single-family homes remained unchanged for a third consecutive month in April, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI held at 20, up marginally from the record low of 18 set in December of 2007 (the series began in January of 1985).

“With the traditional home buying season now well underway, we have not seen the bump in sales activity that we normally would this time of year,” said Sandy Dunn, NAHB president and a home builder from Point Pleasant, W.Va. “At this point, all eyes are on Congress and its efforts to craft meaningful legislation to help support the housing market and stabilize our nation’s economy before it heads deeper into recession.”

“While builders continue to report improvements in traffic through their model homes compared with late last year, this activity has not translated to actual sales. That’s where Congress can make a big difference,” noted NAHB Chief Economist David Seiders. “Measures that stimulate consumer confidence in the housing market, push the fence-sitters into the ring and put a floor under house prices can successfully halt the drag that housing is exerting on the national economy, and help stabilize financial markets at the same time. But such measures need to be implemented as soon as possible in order to limit the severity of the economic recession that now is underway.”

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 either “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 sales conditions as good than poor.

The HMI’s component index gauging current sales conditions declined two points to 18 in April, its lowest level since November of last year. The component gauging traffic of prospective buyers held even at 19 for a third consecutive month, up from a low of 13 last December. The component gauging sales expectations for the next six months rose four points to 30, although this measure was down substantially from a year earlier.

Regionally, HMI results were mixed this month, with a one-point gain to 22 registered in the Northeast, a one-point decline to 15 registered in the Midwest, a two-point decline to 24 posted for the South and a two-point gain to 17 posted for the West.

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 regarding housing statistics is also available at www.housingeconomics.com.

Source: National Home Builders Association, April 15, 2008