Homebuilders, Housing Analysis

Home Builders Have Great Confidence For Next 6 Months

April 16, 2013 by · Leave a Comment 

Home Builder Confidence Positive 6 Month Outlook April 2013The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to a rating of 42 from the March reading of 44.

The Housing Market Index (HMI) measures home builder confidence for newly built single family homes.

A reading of more than 50 indicates better than average confidence, while readings below 50 indicate that home builders have concerns about current market conditions.

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NAHB Housing Market Index Results For April

Home builders expressed concern over a gap between a growing demand for homes and builders’ ability to meet the demand for new homes as housing market conditions improve.

Top concerns cited by home builders surveyed include:

  • Availability of construction credit
  • Construction costs rising faster than home values
  • Restrictive mortgage lending rules impacting would-be home buyers

Bottleneck for building materials and available developed lots are also impacting home builder confidence, as they have lagged behind increasing demand for homes since the recession and will need time to catch up.

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Six Month Confidence Forecast Strongest Since February 2007

While builder confidence fell on a month-to-month basis, home builders have a more positive outlook for the next six months. The builder confidence reading for the next six months came in at 53 for April, which is the highest reading since February 2007.

In terms of demand for newly built homes, home builders surveyed said that a shortage of existing homes, low mortgage rates and increasing consumer confidence are expected to improve the market for existing homes.

Consumer confidence is important to all facets of the home building and mortgage lending industries.

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Buying a home is typically the largest investment that consumers make, and their confidence in the economy plays a role in their decisions about when or if they buy a home.

Regional readings for housing markets are based on a three-month rolling average. Results for April were unchanged or lower in all four regions as compared to the rolling average reported in March:

  • Northeast: The reading of 38 is unchanged from March.
  • Midwest: The reading declined by two points to 45.
  • South: April’s reading declined by four points to 42.
  • West: April’s reading declined by three points to 55, but remains in positive territory.

Regional readings reflect conditions impacting only a specific area of the U.S. Recent examples include Hurricane Sandy in the Northeast, and an ongoing lack of land available for home construction in the West.

Want to know more about home builder confidence here in Northwest Indiana? Contact a contributing real estate professional today and get the facts about our local Northwest Indiana real estate market.

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