Mar 20, 2014 | Uncategorized
Spring is almost here, and the National Association of Home Builders Housing Market Index (NAHB HMI) thawed slightly in March.
The current reading of 47 is one point higher than for February, but still indicates pessimism among a majority of builders surveyed. Analysts expected a March reading of 50.
The gauge of builder confidence stayed near its lowest level since May.
March’s NAHB HMI reading remained below the benchmark reading of 50, which indicates that an equal number of builders are positive about housing market conditions as those who are negative.
A reading over 50 indicates that more builders are positive than negative. Last August the NAHB HMI reading reached 58, its highest level since 2005.
Kevin Kelly, NAHB’s chairman said that builder concerns included a lack of land available for development, the lagging effects of severe winter weather and labor shortages.
NAHB HMI Details Show Regional Variances
The NAHB HMI national reading is based on builders’ views of three aspects of housing markets. The March reading of 47 is based on three components. The reading for prospective buyer traffic in new home developments rose by two points to 33.
Builder expectations for present sales of single-family homes rose from 51 to 52. Builder confidence in home sales in coming months fell from a reading of 54 to 53.
Rising mortgage rates and home prices along with inconsistent labor markets influenced builder confidence concerning future home sales.
March Readings For Regional Home Builder Confidence Were Varied:
- Northeast: March’s reading was five points lower at 29.
- Midwest: Builder confidence gained three points in March for a reading of 52.
- West: Builder confidence dropped by five points to a reading of 53.
- South: March’s reading rose by two points to 48.
In related news, the Department of Commerce reported housing starts for February dropped to 907,000 as compared to January’s reading of 909,000 housing starts and expectations of 908,000 housing starts.
Building permits for February rose by 7.70 percent to their second highest level since the recession for a total of 1.02 million permits. The rise in building permits was attributed to construction plans for condominium complexes and rental units.
Jan 17, 2013 | Housing Analysis
The National Association of Homebuilders (NAHB) Housing Market Index ended its 8-month winning streak this month, posting a value of 47. The January 2013 reading is on level with last month, and remains at a near 7-year high.
The Housing Market Index (HMI) is a measure of home builder confidence.
HMI readings below 50 indicate a “poor” new construction conditions for single-family homes nationwide; ratings above 50 signal “good” ones.
Not since April 2006 has the Housing Market Index crossed into “good” territory, but the past two years have witnessed the HMI nearly triple; and the index is up from a reading of 25 just twelve months ago.
Values would have likely increased this month, too, if not for builder uncertainty. The NAHB cites concern over prolonged legislative decisions as contributing factors to this month’s builder confidence reading. Specifically, the trade group expressed concern over the future of the federal income tax deduction for home mortgage interest and spending cuts related to the recent, so-called “fiscal cliff”.
As compared to the month prior, this month’s HMI showed the following :
- Current housing conditions were mostly unchanged between December and January
- Sales expectations the next six months dropped slightly between December and January
- Prospective home buyer foot traffic increased slightly between December and January
January marks the tenth consecutive month through which buyer foot traffic has increased. Foot traffic is now at its highest level in nearly 7 years.
The NAHB Housing Market Index suggests a slow, steady rise in confidence among the nation’s home builders. This is occurring, in part, because of improving housing market conditions both nationally and regionally. Another factor is rising confidence among today’s home buyers.
Home sale prices Massachusetts remain relatively low and mortgage rates sit below 4 percent. With demand for homes growing, prices are expected to rise. Home buyers this season may be more likely to get a good “deal” than the buyers of spring or summer.
Dec 19, 2012 | Housing Analysis
The National Association of Home Builders (NAHB) released its Housing Market Index (HMI), showing another monthly gain — its ninth in a row.
The HMI — a gauge of homebuilder confidence — rose 1 point to 47 in December 2012, lifting the index to its highest levels since April 2006.
Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions. Coincidentally, the last time that the HMI read above 50 was April 2006, too.
The Housing Market Index is based on a survey which the NAHB sends to its members. The survey asks the nation’s builders to rate the current housing market conditions.
In December, home builders reported gains in two of the three areas surveyed:
- Current Single-Family Sales: 51 (+2 from November 2012)
- Projected Single-Family Sales: 51 (-1 from November 2012)
- Buyer Foot Traffic: 36 (+1 from November 2012)
It’s noteworthy that buyer foot traffic has climbed over nine straight months and is now at it’s highest reported level in nearly 7 years. Low mortgage rates and rising home prices throughout Worcester County area have compelled today’s renters and existing homeowners to consider their home buying options.
This was none more apparent that in the Northeast Region in which builder confidence grew twelve points to 42. The Midwest Region also showed a strong improvement, climbing 2 points to 53. The West and South regions fell slightly between November and December.
For today’s buyers, rising builder confidence may be a signal that home prices are headed higher. Confident home sellers — including the nation’s builders — are less likely to make price concessions into an improving market, or may be less likely to offer free upgrades to buyers.
Therefore, if you are in the market for a newly-built home, consider that you may get the best “deal” by acting sooner rather than later. Mortgage rates are rising and home prices are, too. Six months from now, your costs of homeownership may be higher.
Dec 14, 2012 | Housing Analysis
Last week’s National Association of Home Builders/First American Improving Markets Index (IMI) brought positive news about U.S. housing markets and the broader U.S. economy, in general.
According to the IMI, there are now 201 U.S. markets which can be considered “improving”.
To meet this standard, a local area economy must exhibit at least six consecutive months of improvement in terms of local employment, single-family housing permits and area home prices; and, at least six months must have passed since each of these readings were at their respective low points, called troughs.
The Improving Market Index added 76 metropolitan areas in December as compared to the month prior. 45 states are now represented on the list, in addition to the District of Columbia.
The cities deemed “improving” aren’t limited to recent, high-profile hot spots such as Detroit, Michigan; and Phoenix, Arizona, either. Several of the newly-included areas for December were :
- Atlanta, Georgia
- Bloomfield, Illinois
- Ithaca, New York
- Riverside, California
- Seattle, Washington
The geographic diversity of this month’s Improving Market Index suggests a nationwide economic recovery in progress. More jobs, a steady supply of available homes, plus rising home prices helps communities thrive.
Unfortunately, it may also mean less opportunity to buy homes as rock-bottom prices.
As sellers and home builders gain confidence in the economy, it may be more challenging for today’s Worcester County area buyers to get a “great deal”. In addition, an improving, post-recession economy will likely lead mortgage rates higher, robbing home buyers of their purchasing power.
Freddie Mac says that the average 30-year fixed rate mortgage rate is 3.32% nationwide. In a fully-recovered economy, that rate could be 5 percent or higher. The impact on monthly housing payments would be palpable.
The National Association of Homebuilders expects more markets to join the Improving Market Index list through 2013. Today’s home buyers may want to lock in today’s low rates before economic improvement leads mortgage rates higher.
Nov 20, 2012 | Housing Analysis
The National Association of Home Builders (NAHB) released its Housing Market Index (HMI) Tuesday, which showed sharp, 5-point increase to 46 for November 2012, marking the seventh consecutive monthly gain for the HMI, and lifting the index to its highest point since May 2006.
Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions.
The Housing Market Index is a measure of builder confidence, published monthly, based on a survey sent to NAHB members which asks them to rate housing market conditions.
In November, home builders reported gains in two of the three areas surveyed:
- Current Single-Family Sales: 49 (+8 from October 2012)
- Projected Single-Family Sales: 53 (+2 from October 2012)
- Buyer Foot Traffic: 35 (unchanged from October 2012)
Builders report growing demand for new homes as inventories for alternative properties — distressed and foreclosed homes, for example — shrink nationwide.
Even Hurricane Sandy did little to suppress builder confidence.
The NAHB survey was conducted in the two weeks immediately following Hurricane Sandy so the Housing Market Index does reflect builder sentiment during that period. All regions of the country posted confidence gains in November.
The South Region showed a 4-point gain to 43; the West Region showed a 3-point gain to 47; the Midwest Region showed a 3-point gain to 45; and the Northeast Region showed a 2-point gain to 31.
Despite the gains, builders in Massachusetts and nationwide still report challenges with home appraisals and tight credit conditions. In addition, a shortage of buildable lots in some areas is limiting the ability for home builders to put more single-family homes on the market.
As builder confidence grows, today’s buyers throughout Massachusetts should prepare for the possibility of higher home prices. Confident sellers are less likely to make price concessions or to offer free upgrades.
If you are in the market for a new home, therefore, the time between now and the New Year may be the best opportunity to make a bid on a home. Starting next year, low prices may be gone.
