Housing Market Index

A steady level for the housing market index in January marks a strong beginning of the year for builders of new, single-family homes in the U.S. This is a continuation of an eight-month gradual climb back to stability for the housing market that has brought figures to the highest levels since April 2006.

Housing Market Index

January: Fiscal Cliff and Other ‘Uncertainties’

The housing market index, a survey designed by the National Association of Home Builders (NAHB) and Wells Fargo to measure builder confidence and sales expectations in the industry, has remained at around 50, close to the same levels as last month. Builders’ views on the market appear to be divided between good and poor. Much of the confidence was shaken by last month’s fiscal cliff negotiations, as well as ongoing policy discussions regarding spending cuts and mortgage interest deductions.

Nevertheless, NAHB chairman Barry Rutenberg points out that if the numbers are any indication, the future of the housing market is looking bright this year. ( Add this as a strong statement for the opening) This is further supported by the gradual improvement shown by many markets in the industry, signaling slow but certain recovery.

Housing Market Index: Other Numbers

In spite of the seemingly cautious views of the steadiness of the numbers, the survey showed promise overall for the housing market in the next six months. Several additional figures in the housing market index for January are worth noting:

• The current sales condition component of the HMI remained at 51, unchanged from last month.
• The component measuring sales expectations in the housing market for the next six months fell one point to 49.
• The prospective buyer traffic component gained one point from last month, rising to 37.
• At 36 and 50, respectively, the Northeast and Midwest regions posted two-point gains for the HMI three-month moving average. The South gained three points for a total of 49, while the West posted the largest increase at four points to 51.

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Source:

• National Association of Home Builders (NAHB) Housing Market Index report

The National Association of Home Builders (NAHB) and Wells Fargo released the latest Housing Market Index this month, which showed continued stability and growth in the housing market and overall positive expectations among builders nationwide.

The NAHB Housing Market Index is a monthly report rating traffic through new home communities and expectations in relation to sales and growth.  It has been conducted for the past 25 years.  This most recent report reflects an overall decrease of one point to 46, on a scale where more than 50 indicates builders feel the market is good versus poor or fair. On the whole, the February report indicates stability in builder confidence, hovering close to its strongest rating since May 2006.

There are several components to the Housing Market Index, one of which relates to sales expectations.  The component reflecting sales expectations for the next 6 months rose one point to 51, demonstrating a national trend of increasing demand for new homes. While issues such as the rising cost of building materials and uncertain job growth do continue to factor into the figures, 2012 showed solid gains and moderate growth. NAHB Chairman Rick Judson, himself a North Carolina home builder, predicts moderate growth for 2013, tempered slightly by previously mentioned issues such as cost of materials, availability of labor in some regions, and customers’ ability to access mortgage credit.

According to Lawrence Yun, Chief Economist for the National Association of REALTORS® (NAR) predicts increasing demand for new homes with the potential for shortages and rapid price gains. It would seem that the nation’s homebuyers are indeed ready and willing to purchase new homes at an increasing pace. In fact, NAR predicts new home sales will grow from 368,000 in 2012 to as many as 575,000 in 2013.

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Sources:

–NAHB® National Association of Home Builders

-New construction rises from the ashes, Baldwin Park Living