Health & Fitness
Home Builders Hold Great Confidence For New Homes Over Next 6 Months
The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to 42 from the March reading of 44.
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:
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- Availability of construction credit
- Construction costs rising faster than home values
- Restrictive mortgage lending rules impacting would-be home buyers
Supply chains for building materials and available developed lots are also impacting home builder confidence, as they have been lagging behind increasing demand for homes since the recession and will need more time to catch up.
Six Month Confidence Forecast Strongest Since February 2007
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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, the 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.
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 the impact of Hurricane Sandy in the Northeast, and an ongoing lack of land available for home construction in the West.
