Washington, DC, December 16-- The nation’s home builders are in good holiday spirits this December, maintaining the same high level of confidence as the last two months, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI).
A new regional breakout of the HMI data also reveals that western builders are, on the whole, the most optimistic of all their colleagues.
The December HMI edged up to 71, indicating maintenance of strong builder attitudes in the last three months.
"Builders have every reason for good cheer this holiday season," said NAHB president Bobby Rayburn, a home and apartment builder from Jackson, Miss. "The bottom line is that buyer demand continues to keep builders busy and, like most business owners, builders are happiest when we’re busy."
"On a nationwide basis, the final quarter of 2004 has been a good one for home builders," agreed NAHB chief economist David Seiders. "Indeed, the average HMI was up several points for the quarter, reflecting excellent financing conditions, rising home prices and an improving economy."
The NAHB/Wells Fargo Housing Market Index is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months as either good, fair or poor. They also 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 sales conditions as good than poor. A new addition to the HMI this month is a seasonally adjusted regional component that measures builder confidence in each of the four Census regions.
In December, the HMI component gauging current single-family sales remained unchanged at 77 while the component gauging expected sales in the next six months rose one point to 79 and the component gauging traffic of prospective buyers also rose one point to 52.
Regional HMI scores show the greatest confidence prevailing among western builders, followed by their counterparts in the South, Northeast and Midwest, respectively. The western HMI score was well above the national average, at 80.1; the southern HMI score was also very high, at 76.1; and the northeastern HMI score just surpassed the national average, at 71.9. The Midwest had the lowest HMI score, at 56.7, which still reflects a positive balance of opinion among builders in the region.
"The Midwest’s relatively weak showing presumably reflects builder perceptions of the area’s relatively weak job market, which has lost one million jobs since mid-2000 and only started picking up again in the last two quarters," said NAHB’s Seiders.
