The National Association of Home Builders (NAHB) released its monthly Housing Markets Index on April 15. The Housing Markets Index dipped two points to 42 this month, but the numbers don’t tell the entire story. The fact remains that more buyers are looking to build their dream homes and demand for new construction remains strong.
Complementing the high demand for new housing are historically low interest rates that continue to hover near 3 percent. Buyers want to buy and now have the means to do so. Today’s builders face challenges of supply, financing, and personnel. Supplies of materials and land are the primary concern. NAHBChairman Rick Judson stated , “Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values.”
The Housing Markets Index gauge derives its score from a three-pronged approach. Builders are asked to rate traffic from buyers, their current sales, and sales in the coming six months. These components are averaged
and a total greater than 50 indicates most builders feel the market conditions are good. While the overall score in this month’s Housing Markets Index is 42, builder expectations for sales in the next six months increased three points from last month, to 53. Overall traffic was down four points to 30 and current sales expectations dipped two points to 45. NAHB Chief Economist David Crowe expressed confidence, stating that with time the chain of supply as well as the work force will be able to reestablish itself and catch up to the demand.
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