Homebuilders, Housing Analysis, Real Estate News

Home Builders Still Confident On New Home Sales Ahead

February 20, 2013 by · Leave a Comment 

Home Builder Confidence StrongMany times real estate market experts point to the feelings of the nation’s home builders as a bell-weather signaling the health of the housing sector.

This month’s reading indicates that home builders are feeling pretty good about today and the next six months.

The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) for February changed by one point to 46 as compared to 47 for January’s reading.

Over the last four months, HMI readings have stayed within a three-point range between 45 and 47, indicating a plateau after rising from 25 to 45 in 2012.

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Housing Market Index Near Highest Levels Since 2006

The good news is that February’s reading remains near the HMI’s highest level since April 2006, when the Housing Market Index reached 51.

Some builders may be taking a wait-and-see stance in their confidence as high national unemployment rates and rising costs for building materials impact home buying ability and home prices.

Regional factors influencing builder confidence include difficulties in finding building sites and labor required for building new homes.

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3 Important Categories Affect The Home Builders Index

The HMI is a seasonally adjusted index composed of three survey categories of home builder confidence.

  • Current new single-family home sales fell by one point to 51 in February, but sustained a positive rating.
  • Single-family home sales for the next 6 months achieved a reading of 50 in February, up from 49 in January.
  • Foot-traffic in new single-family homes fell by four points from 36 in January to 32 in February.

Readings above 50 indicate that more builders are finding conditions good than bad.

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February results for four regional categories consist of 3-month moving averages for new home sales: the Northeast gained 3 points to 39, The West gained 4 points to 55, the Midwest fell 2 points to 48 and the South fell by 2 points to 47.

With demand for homes increasing, home prices and mortgage rates are likely to rise during spring and summer as warmer weather brings out more potential buyers.

Check with your real estate and mortgage professional for the most updated market details in your area.

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