Looking Forward Six Months, Home Builders Have Lower Expectations

ting that single-family home builders remain cautious and concerned about the fragile state of today's economy and housing market, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) declined one point to 15 in June. ‘The outlook for home sales has improved somewhat in recent months, due largely to implementation of the first-time home buyer tax credit and gains in housing affordability," says NAHB Chair Joe Robson. "However, looking forward, home builders are facing a few headwinds, including expiration of the tax credit at the end of November, a recent upturn in interest rates, and especially the continuing lack of credit for housing production loans." Derived from a monthly survey conducted by the NAHB, the index gauges builder perceptions of current single-family home sales and sales expectations for 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 for 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. Two out of three of the HMI's component indexes were unchanged in June, including the index gauging current home sales, which held at 14, and the index gauging traffic of prospective buyers, which held at 13. Meanwhile, the index gauging expectations for the next six months declined a single point, to 26. Regionally, the decline was entirely focused in the South, which is the nation's largest housing market. There, the HMI declined 3 points to 15, while the rest of the regions posted gains. The Northeast had a one-point gain to 20, the Midwest had a one-point gain to 15, and the West had a two-point gain to 14. SOURC

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