Washington, DC, February 15, 2007 - Builder confidence continued to rise in February, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI increased from 35 in January to 40 in February, up from a low of 30 last September and the highest level since June of 2006.
“Builders are still cautious as they continue to manage their inventory, but their assessments of the demand side of the single-family market are improving,” said NAHB President Brian Catalde, a home builder from Playa del Rey, Calif. “Every component of the February HMI – present home sales, sales expectations for the next six months and buyer traffic -- showed a significant positive uptick in February.”
“The HMI results are consistent with Federal Reserve Chairman Ben Bernanke’s assessment to Congress this week that there are signs of stabilization on the demand side of the housing market,” said NAHB Chief Economist David Seiders.
Lower energy prices, favorable mortgage rates and solid growth in employment and household income have all contributed to the recent stabilization of home buyer demand, Seiders added. “In addition, builders continue to offer substantial sales incentives to move their product and limit cancellations, which has helped to firm up buyer demand.”
Derived from a monthly survey that NAHB has been conducting for 20 years, the NAHB/Wells Fargo Housing Market Index (HMI) gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as either “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.
All three component indexes registered improvement in February. The index gauging current single-family home sales gained six points to 42, while the component measuring the traffic of prospective buyers rose five points to 31. Of particular note, the index gauging sales expectations for the next six months jumped over the 50 threshold for the first time since last June, posting a seven-point gain to 55.
