Builder sentiment moves up one notch to 6-month high

NAHB Wells Fargo Housing Market Index
NAHB Wells Fargo Housing Market Index (Photo

According to the National Association of Home Builder/Well Fargo Housing Market Index (HMI), in April, builder confidence for newly constructed single-family homes rose tremendously to 63. Over the past three months, sentiment levels have been in the low 60s.

Builders have reported the essential need for cheap and affordable new single-family homes irrespective of the limited number of construction workers and expensive building materials. Low interest rates, favorable demographics, and continuous job growth will help spark sales, but supply-side headwinds responsible for the increase in price will affect housing growth.

There was an increase in points as the HMI index gauging current sales rose by a point to 69, while the measuring traffic of potential buyers rose three points to 47. However, the measure charting sales expected in the next six months reduced by a point to 71.

nahb wells fargo housing market index chart april 2019
NAHB Wells Fargo Housing Market Index (HMI) chart April 2019

After analyzing the three-month moving averages for regional HMI scores, a three-point gain of 51 was posted by the Northeast, while the Midwest was increased by two points to obtain 53. Similarly, one point was added to the South to obtain 67, while no points were added or removed from the West at 69.

For the past 30 years, the NAHB has been conducting a monthly survey on expectations of the Housing Market Index gauges builder.  Analysis of single-family home sales for the next six months is categorized as “good,” “fair,” or “poor.” Builders were also asked to rate the responsive rate of buyers from “high to very high,” “average” or “low to very low.”

The obtained scores were used to estimate a continuous index where numbers above 50, indicates good housing conditions by home builders.

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Written by HousingMarket

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