Following four consecutive months of improvement, builder confidence in the
market for newly built, single-family homes held unchanged in September with a
reading of 58 on the National Association of Home Builders/Wells Fargo Housing
Market Index (HMI), released recently.
“While builder confidence is
holding at the highest level in nearly eight years, many are reporting some
hesitancy on the part of buyers due to the sharp increase in interest rates,”
says NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “Home buyers
are adjusting to the fact that, while mortgage rates are still quite favorable
on a historic basis, the record lows are probably a thing of the
“Following a solid run up in builder confidence over the past
year, we are seeing a pause in the momentum as consumers wait to see where
interest rates settle and as the headwinds of tight credit, shrinking supplies
of lots for development and increasing labor costs continue,” noted NAHB Chief
Economist David Crowe.
Derived from a monthly survey that NAHB has been
conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges
builder perceptions of current single-family home sales and sales expectations
in 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 from 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.
HMI component indexes
were mixed in September. While the component gauging current sales conditions
held unchanged at 62, the component gauging sales expectations in the next six
months declined three points to 65 and the component gauging traffic of
prospective buyers increased one point, to 47.
All four regions posted
gains in their three-month moving average HMI scores in September, including a
two-point gain to 41 in the Northeast, a four-point gain to 64 in the Midwest, a
two-point gain to 56 in the South and a four-point gain to 61 in the West,
HMI tables can be found at nahb.org/hmi. For more information, visit housingeconomics.com.