Washington, DC, Apr. 15--Builder confidence in the market for new single-family homes rose strongly in early April, according to the National Association of Home Builders' latest Housing Market Index (HMI), released today. The HMI rose five points to 69 in April, bringing it back up to speed with its level in late 2003 and January 2004.
"Favorable interest rates and strong home price appreciation definitely are still driving demand in today's housing market, despite the recent bump-up in mortgage rates," said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, MS. "Builders actually saw quite a few buyers hurrying to lock in financing as mortgage rates firmed up."
"We expect the demand for single-family homes to remain quite strong in coming months, despite the rise in long-term mortgage rates, as growth in employment and household income accelerates," explained NAHB Chief Economist David Seiders. "Indeed, the economic and demographic foundations for housing are very solid, supporting both home sales and house prices. Theories of house price 'bubbles' are bound to be discredited in the process."
The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes, and expected sales in the next six months, as "good," "fair" or "poor." They are also asked to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for responses to each component are used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI's component indexes rose strongly in April. The index gauging current sales of new single-family homes and the index gauging sales expectations for the next six months each rose six points to 76. Traffic of prospective buyers was virtually unchanged from March, down a single notch to 48.
"Builders clearly expect housing demand to be well maintained in coming months," said Seiders. "NAHB is currently forecasting 1.07 million sales of new homes in 2004, off only marginally from last year's record pace."
