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19 05, 2014

What’s Ahead For Mortgage Rates This Week – May 19, 2014

What's Ahead For Mortgage Rates This Week - May 19, 2014Last week’s economic news was relatively flat, but highlights include the NAHB Housing Market Index for May, which posted its lowest reading since May 2013. Although analysts expected a May reading of 48, the May 2014 index reading was 45 as compared to April’s reading of 46.

The NAHB reported that rising home prices and unpredictable job markets were factors in builders’ loss of confidence. Although the economy is growing stronger, many would-be homebuyers remain skeptical of economic conditions and remain on the sidelines.

NAHB: Stronger Builder Confidence Expected in Coming Months

Builder confidence in market conditions for single family homes within the next six months were higher at 57, a one-point improvement over April’s reading. Builder confidence in buyer foot traffic increased by two points to 33; this was likely a result of warmer weather. David Crowe, chief economist of the NAHB, said that builder confidence is expected to improve as consumers grow more secure about their employment.

Economy: Retail Sales Slow

Retail sales for April posted a gain of 0.10 percent over the March reading of an upwardly revised 1.50 percent and expectations of 0.40 percent for April. The Commerce Department reported that without the automotive sector, April’s retail sales were unchanged. The difference between March and April retail sales readings was attributed to a burst of spending after severe winter weather and the Easter holiday.

Mortgage Rates, Jobless Claims Lower

Freddie Mac reported lower average mortgage rates across the board, with the average rate for a 30-year fixed rate mortgage one basis point lower at 4.20 percent. The average rate for a 15-year mortgage was three basis points lower at 3.29 percent. Discount points for 30 and 15-year mortgages were unchanged at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by four basis points to 3.01 percent. Discount points dropped from 0.50 percent to 0.40 percent. 

New Jobless claims fell from the prior week’s reading of 321,000 to 297,000. Analysts had expected jobless claims to be unchanged from the prior week’s reading.

Manufacturing Sector Shows Strength

The Empire State Index, which measures manufacturing growth in New York rose to 19.0 in May against an expected reading of 5.0 and April’s reading of 1.3. The Philly Fed Index, another indicator of manufacturing, surpassed its expected reading of 14.3 and came in at 15.4, but May’s reading was lower than April’s 16.6.

This Week

This week’s scheduled economic news includes the release of the minutes of the last FOMC meeting, New Jobless Claims, Freddie Mac’s report on mortgage rates, Existing Home Sales, New Home Sales and Leading Indicators. 

21 04, 2014

What’s Ahead For Mortgage Rates This Week – April 21, 2014

What's Ahead For Mortgage Rates This Week - April 21, 2014Last week’s economic news supported the general outlook for moderate economic growth. Housing related news included the National Association of Home Builders / Wells Fargo Housing Market Index for April and Housing Starts for March.

NAHB: Builder Confidence Holds Steady Amid Concerns

The NAHB/Wells Fargo HMI for April ticked upward by one point to a reading of 47 against the March revised reading of 46. Home builders surveyed expressed concerns about high home prices, a lack of available lots for development and a labor shortage. Some desirable markets have been held back due to low inventories of available and/or affordable homes.

Builders surveyed for the HMI were asked to rate three components used in compiling the monthly index; these include current market conditions, market conditions expected over the next six months, and buyer foot traffic in newly built homes. April’s readings were 51, 57 and 32 respectively.

Readings for current market conditions and buyer foot traffic were unchanged from March, but builder confidence for market conditions in the next six months rose by four points.

Any reading above 50 indicates that more builders are confident about market conditions for newly-built single-family homes than not. 

Housing Starts Pick Up After Winter Storms, But Fall Short Of Expectations

March Housing Starts rose by 2.80 percent at a seasonally adjusted annual rate of 946,000 starts as compared to expectations of 990,000 and February’s reading of 920,000 housing starts, which was revised from 907,000 starts.

The March reading represented a 5.90 percent decrease from March 2013, and is consistent with concerns expressed by home builders surveyed for the NAHB HMI for April.

Building permits issued for March were also lower by 2.40 percent at a rate of 990,000 permits issued. This slippage was largely due to the falling rate of building permits issued for apartment construction.

Higher home prices and mortgage rates along with inconsistent (but improving) labor markets were cited as reasons for builder pessimism, but analysts said that projects delayed by severe weather are expected to pick up in the coming months.

Mortgage Rates Fall, Discount Points Hold Steady

Last week’s average mortgage rates fell across the board according to Freddie Mac’s weekly Primary Mortgage Market Survey. The rate for a 30-year fixed rate mortgage fell by seven basis points to 4.27 percent. 15-year mortgages had an average rate of 3.33 percent as compared to the prior week’s reading of 3.38 percent. 5/1 adjustable rate mortgages had an average rate of 3.03 percent, down from 3.09 percent the previous week. Discount points were unchanged at 0.70, 0.60 and 0.50 percent respectively.

Fed Chair Upbeat In New York Speech

Federal Reserve Chair Janet Yellen struck a positive note in a speech given before the Economic Club of New York last Wednesday. She indicated that the Fed and many economists expect a return to full employment and stable prices by the end of 2016. Analysts characterized Yellen’s speech as upbeat on economic recovery and inflation, while “dovish” on monetary policy.

Ms. Yellen reiterated the Fed’s intention to monitor current and developing economic situations before making changes to its current monetary policy. She acknowledged that “twists and turns” in the economy could occur, and that Fed policy would shift as needed to address changes.

The Fed also released its Beige Book Report last Wednesday. This report indicated that the economy is recovering in most areas of the U.S.

This Week

This week’s scheduled economic news includes Leading Economic Indicators, Existing Home Sales for March, FHFA House Price Report for February and New Home Sales for March. The University of Michigan Consumer Sentiment report for April rounds out this week’s news. 

 

20 03, 2014

NAHB Housing Market Index Ticks Upward

NAHB Housing Market Index Ticks UpwardSpring is almost here, and the National Association of Home Builders Housing Market Index (NAHB HMI) thawed slightly in March.

The current reading of 47 is one point higher than for February, but still indicates pessimism among a majority of builders surveyed. Analysts expected a March reading of 50.

The gauge of builder confidence stayed near its lowest level since May.

March’s NAHB HMI reading remained below the benchmark reading of 50, which indicates that an equal number of builders are positive about housing market conditions as those who are negative.

A reading over 50 indicates that more builders are positive than negative. Last August the NAHB HMI reading reached 58, its highest level since 2005.

Kevin Kelly, NAHB’s chairman said that builder concerns included a lack of land available for development, the lagging effects of severe winter weather and labor shortages.

NAHB HMI Details Show Regional Variances

The NAHB HMI national reading is based on builders’ views of three aspects of housing markets. The March reading of 47 is based on three components. The reading for prospective buyer traffic in new home developments rose by two points to 33.

Builder expectations for present sales of single-family homes rose from 51 to 52. Builder confidence in home sales in coming months fell from a reading of 54 to 53.

Rising mortgage rates and home prices along with inconsistent labor markets influenced builder confidence concerning future home sales.

March Readings For Regional Home Builder Confidence Were Varied:

  • Northeast: March’s reading was five points lower at 29.
  • Midwest: Builder confidence gained three points in March for a reading of 52.
  • West: Builder confidence dropped by five points to a reading of 53.
  • South: March’s reading rose by two points to 48.

In related news, the Department of Commerce reported housing starts for February dropped to 907,000 as compared to January’s reading of 909,000 housing starts and expectations of 908,000 housing starts.

Building permits for February rose by 7.70 percent to their second highest level since the recession for a total of 1.02 million permits. The rise in building permits was attributed to construction plans for condominium complexes and rental units.

20 01, 2014

What’s Ahead For Mortgage Rates This Week – January 20, 2014

What’s Ahead For Mortgage Rates This Week – January 20, 2014Welcome news arrived last week as lower mortgage rates and a higher number of housing starts were reported. Other economic news was mixed:

The Federal Reserve released its Beige Book Report released last Tuesday indicated modest economic growth throughout the 12 Federal Reserve districts. Analysts predicted that this would cause the Fed to further reduce the volume of monthly asset purchases made under its quantitative easing program.

The Atlanta, Cleveland and Kansas City districts reported slower home sales, which supported recent expectations of slowing gains in home prices. 

Mortgage Rates Dip, Housing Starts Up

According to Freddie Mac, average mortgage rates fell last week. The rate for a 30-year fixed rate mortgage dropped from 4.51 to 4.41 percent with discount points unchanged at 0.70 percent. The rate for a 15-year fixed rate mortgage was 3.45 percent as compared to the prior week’s reading of 3.56 percent.

Discount points rose from 0.60 to 0.70 percent. The average rate for a 5/1 adjustable rate mortgage dropped from 3.15 to 3.10 percent; discount points rose from 0.40 to 0.50 percent.

The National Association of Home Builders/Wells Fargo Home Builders Confidence Index dropped slightly in January. Although expectations were for a reading of 59, January’s reading was 56 and lower than December’s revised reading of 57.

The NAHB Index has increased by 19 percent year-over-year and is expected to continue rising in 2014 due to relatively lower mortgage rates, and pent-up demand for homes.

Housing starts for December came in at 999,000 against expectations of 985,000 and November’s revised reading of 1.11 million. Cold weather and concerns over rising mortgage rates in 2014 were cited as causing fewer housing starts. As the Fed tapers its QE program, mortgage rates are expected to rise.

Consumer sentiment toward the economy was lower than expected according to the University of Michigan Consumer Sentiment Index for January. The confidence index was expected to rise to 84.0 based on December’s reading of 82.5, but only achieved a reading of 80.4.

Higher gasoline prices and a slower labor market likely contributed to wavering consumer sentiment; rising inflationary expectations were also considered a cause.

This Week

This week’s scheduled economic news includes an action-packed Thursday as today is Martin Luther King Jr. Holiday and no economic reports are scheduled for Tuesday, Wednesday or Friday.

Thursday’s reports include Weekly Jobless Claims, Freddie Mac’s PMMS, along with Existing Home Prices, FHFA Home Prices and Leading Economic Indicators.

16 04, 2013

Home Builders Hold Great Confidence For New Homes Over Next 6 Months

Home Builder Confidence Positive 6 Month Outlook April 2013The National Association of Home Builders (NAHB) Wells Fargo Housing Market Index (HMI) report for April shows that builder confidence slipped by two points to a rating of 42 from the March reading of 44.

The Housing Market Index (HMI) measures home builder confidence in market conditions for newly built single family homes.

A reading of more than 50 indicates better than average confidence, while readings below 50 indicate that home builders have concerns about current market conditions.

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:

  • 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

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.

20 03, 2013

NAHB Housing Market Index Shows Builder Confidence Slip In March

Home Builder Confidence Index March 2013The National Association of Home Builders (NAHB) released its NAHB/Wells Fargo Housing Market Index for March on Monday.

The HMI measures builder confidence in the market for newly constructed single family homes.

A reading of 50 for the NAHB Housing Market Index (HMI) indicates that more builders are confident of housing market conditions for new single family homes than those who are not confident.

Home builder confidence fell for the third consecutive month with a two-point drop to a reading of 44 in March.

Several Factors Create New Home Bottleneck

An NAHB leader noted that several situations are causing a “bottleneck” in the supply of new homes as compared to those wanting to buy them:

  • Low supply of developed lots available for new construction
  • Rising costs for labor and materials
  • Stricter mortgage credit requirements for homebuyers and lowball home appraisals. (These circumstances are typically caused by some mortgage lenders taking a conservative attitude toward risk management by tightening credit requirements and appraisers erring on the side of caution when valuing single family homes.)

Would-be buyers may find themselves stuck between a lack of buildable lots and ready building supply chains and lenders reluctant to risk mortgage defaults caused by lenient loan approvals.

Keep in mind that this only one perspective; if you’re looking for a new home, don’t give up.

Future Sales Confidence Creates Bright Spot

The HMI also measures builder confidence in three categories including current sales conditions, sales conditions within the next six months and the amount of foot traffic in new housing developments.

Confidence in current sales conditions dropped from 51 points in February to 47 points in March, but the news is not all bad.

Confidence in sale conditions for the next six months rose by one point from 50 to 51, and builder confidence in buyer foot traffic rose by three points to 35.

Foot traffic will likely increase as warmer weather arrives and the peak home buying season gains momentum.

Housing Market Conditions Vary By Region And Community

The three-month rolling average of builder confidence in four geographic regions of the U.S. showed mixed results for March.

The index reading for the Northeast had no change and remained at 39.

Index readings for the Midwest and Southeast declined by one point each to 47 and 46 respectively.

The March index reading for the West came in gaining four points to 58.

If you’re ready to buy a home, check with a licensed real estate professional specializing in the area where you want to buy.

This is the best way to gain specific information on the area’s market conditions and home prices.

20 02, 2013

Strong Builder Confidence May Signal Good Time To Buy New Homes

Home Builder Confidence Strong

Many times real estate market experts point to the feelings of the nation’s home builders as a bell-weather signalling the health of the housing sector.

This month’s reading indicates that home builders are feeling pretty good.

The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) for February changed by one point to 46 as compared to 47 for January’s reading. 

Over the last four months, HMI readings have stayed within a three-point range between 45 and 47, indicating a plateau after rising from 25 to 45 in 2012.

Housing Market Index Near Highest Levels Since 2006

The good news is that February’s reading remains near the HMI’s highest level since April 2006, when the HMI reading reached 51.

Some builders may be taking a wait-and-see stance in their confidence as high national unemployment rates and rising costs for building materials impact home buying ability and home prices.

Regional factors influencing builder confidence include difficulties in finding building sites and labor required for building new homes.

3 Important Categories Affect The Home Builders Index

The HMI is a seasonally-adjusted index comprised of three survey categories of home builder confidence.

Readings above 50 indicate that more builders are finding conditions good than bad within each category and overall:

  • Builder confidence in current new single-family home sales fell by one point to 51 in February, but sustained a positive rating.
  • Builder confidence in new single-family home sales over the next six months achieved a reading of 50 in February, up from 49 in January.
  • Builder confidence in foot-traffic in new single-family homes fell by four points from 36 in January to 32 in February.

February results for four regional categories consist of 3-month moving averages for new home sales: the Northeast gained 3 points to 39, The West gained 4 points to 55, the Midwest fell 2 points to 48 and the South fell by 2 points to 47.

With demand for homes increasing, home prices and mortgage rates are likely to rise during spring and summer as warmer weather brings out more potential buyers.

Check with your real estate and mortgage professional for the most updated market details in your area. 

14 02, 2013

Over 70% Of US Metro Market Housing Markets Improve In February

Improving Market IndexThe National Association of Homebuilders recently released its Improving Markets Index for the month of February.

The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating “measurable and sustained growth”.

259 U.S. markets are qualified as “improving” this month, a 17-market jump from the month prior and includes participants from all 50 states as well as the District of Columbia.

Experts point to improving market conditions in at least one market in all 50 states as a strong indication that the housing recovery is gaining substantial momentum.

This increasing momentum may suggest that now may be a very good time to purchase a home.

Compared to September 2011, when there were just 12 improving metro market areas, the widespread positive movement indicates how conditions are steadily improving nationwide.

So what qualifies a market as “improving”? The NAHB uses strict criteria.

First, the group gathers data from the three separate, independent sources :

  1. Employment growth from the Bureau of Labor Statistics
  2. Housing price appreciation from Freddie Mac
  3. Single-family housing permits growth from the U.S. Census Bureau.

Next, for each of the above data sets, the National Association of Homebuilders separates for local data in each U.S. major metropolitan area.

And, lastly, armed with data, the NAHB looks for areas in which growth has occurred for all three data points for six consecutive months; and for which the most recent “bottom” is at least six months in the past.

In this way, the Improving Market Index doesn’t just measure housing market strength — it measures general economic strength.

Of the 22 markets added to the Improving Market Index in November, the following cities were included : Chico, California; Columbus, Georgia; Fort Wayne, Indiana; Topeka, Kansas; and Wenatchee, Washington.

Several markets dropped off the list, too, including Champaign, Illinois; Lebanon, Pennsylvania; and Amarillo, Texas.

The complete list of 259 metropolitan areas on February’s IMI, plus breakouts of the metropolitan areas newly added and dropped is available online at http://www.nahb.org/imi.

17 01, 2013

Homebuilder Confidence Nearly Triples In 2 Years

NAHB HMI January 2013The National Association of Homebuilders (NAHB) Housing Market Index ended its 8-month winning streak this month, posting a value of 47. The January 2013 reading is on level with last month, and remains at a near 7-year high.

The Housing Market Index (HMI) is a measure of home builder confidence. 

HMI readings below 50 indicate a “poor” new construction conditions for single-family homes nationwide; ratings above 50 signal “good” ones.

Not since April 2006 has the Housing Market Index crossed into “good” territory, but the past two years have witnessed the HMI nearly triple; and the index is up from a reading of 25 just twelve months ago.

Values would have likely increased this month, too, if not for builder uncertainty. The NAHB cites concern over prolonged legislative decisions as contributing factors to this month’s builder confidence reading. Specifically, the trade group expressed concern over the future of the federal income tax deduction for home mortgage interest and spending cuts related to the recent, so-called “fiscal cliff”.

As compared to the month prior, this month’s HMI showed the following :

  • Current housing conditions were mostly unchanged between December and January
  • Sales expectations the next six months dropped slightly between December and January
  • Prospective home buyer foot traffic increased slightly between December and January

January marks the tenth consecutive month through which buyer foot traffic has increased. Foot traffic is now at its highest level in nearly 7 years.

The NAHB Housing Market Index suggests a slow, steady rise in confidence among the nation’s home builders. This is occurring, in part, because of improving housing market conditions both nationally and regionally. Another factor is rising confidence among today’s home buyers.

Home sale prices remain relatively low and mortgage rates sit below 4 percent. With demand for homes growing, prices are expected to rise. Home buyers this season may be more likely to get a good “deal” than the buyers of spring or summer.

19 12, 2012

Homebuilder Confidence Rises For 9th Straight Month

Housing Market Index December 2012The National Association of Home Builders (NAHB) released its Housing Market Index (HMI), showing another monthly gain — its ninth in a row.

The HMI — a gauge of homebuilder confidence — rose 1 point to 47 in December 2012, lifting the index to its highest levels since April 2006.

Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions. Coincidentally, the last time that the HMI read above 50 was April 2006, too.

The Housing Market Index is based on a survey which the NAHB sends to its members. The survey asks the nation’s builders to rate the current housing market conditions.

In December, home builders reported gains in two of the three areas surveyed:

  • Current Single-Family Sales: 51 (+2 from November 2012)
  • Projected Single-Family Sales: 51 (-1 from November 2012)
  • Buyer Foot Traffic: 36 (+1 from November 2012)

It’s noteworthy that buyer foot traffic has climbed over nine straight months and is now at it’s highest reported level in nearly 7 years. Low mortgage rates and rising home prices have compelled today’s renters and existing homeowners to consider their home buying options.

This was none more apparent that in the Northeast Region in which builder confidence grew twelve points to 42. The Midwest Region also showed a strong improvement, climbing 2 points to 53. The West and South regions fell slightly between November and December.

For today’s buyers, rising builder confidence may be a signal that home prices are headed higher. Confident home sellers — including the nation’s builders — are less likely to make price concessions into an improving market, or may be less likely to offer free upgrades to buyers.

Therefore, if you are in the market for a newly-built home, consider that you may get the best “deal” by acting sooner rather than later. Mortgage rates are rising and home prices are, too. Six months from now, your costs of homeownership may be higher.

14 12, 2012

Improving Market Index : Up To 201 Cities For December 2012

December IMI includes 201 citiesLast week’s National Association of Home Builders/First American Improving Markets Index (IMI) brought positive news about U.S. housing markets and the broader U.S. economy, in general.

According to the IMI, there are now 201 U.S. markets which can be considered “improving”.

To meet this standard, a local area economy must exhibit at least six consecutive months of improvement in terms of local employment, single-family housing permits and area home prices; and, at least six months must have passed since each of these readings were at their respective low points, called troughs.

The Improving Market Index added 76 metropolitan areas in December as compared to the month prior. 45 states are now represented on the list, in addition to the District of Columbia.

The cities deemed “improving” aren’t limited to recent, high-profile hot spots such as Detroit, Michigan; and Phoenix, Arizona, either. Several of the newly-included areas for December were :

  • Atlanta, Georgia
  • Bloomfield, Illinois
  • Ithaca, New York
  • Riverside, California
  • Seattle, Washington

The geographic diversity of this month’s Improving Market Index suggests a nationwide economic recovery in progress. More jobs, a steady supply of available homes, plus rising home prices helps communities thrive.

Unfortunately, it may also mean less opportunity to buy homes as rock-bottom prices.

As sellers and home builders gain confidence in the economy, it may be more challenging for today’s buyers to get a “great deal”.  In addition, an improving, post-recession economy will likely lead mortgage rates higher, robbing home buyers of their purchasing power.

Freddie Mac says that the average 30-year fixed rate mortgage rate is 3.32% nationwide. In a fully-recovered economy, that rate could be 5 percent or higher. The impact on monthly housing payments would be palpable.

The National Association of Homebuilders expects more markets to join the Improving Market Index list through 2013. Today’s home buyers may want to lock in today’s low rates before economic improvement leads mortgage rates higher.

20 11, 2012

Homebuilder Confidence Spikes To 6-Year High

NAHB Housing Market IndexThe National Association of Home Builders (NAHB) released its Housing Market Index (HMI) Tuesday, which showed sharp, 5-point increase to 46 for November 2012, marking the seventh consecutive monthly gain for the HMI, and lifting the index to its highest point since May 2006.

Readings under 50 indicate unfavorable housing conditions for builders. Readings over 50 signal “good” conditions. 

The Housing Market Index is a measure of builder confidence, published monthly, based on a survey sent to NAHB members which asks them to rate housing market conditions.

In November, home builders reported gains in two of the three areas surveyed:

  • Current Single-Family Sales: 49 (+8 from October 2012)
  • Projected Single-Family Sales: 53 (+2 from October 2012)
  • Buyer Foot Traffic: 35 (unchanged from October 2012)

Builders report growing demand for new homes as inventories for alternative properties — distressed and foreclosed homes, for example — shrink nationwide.

Even Hurricane Sandy did little to suppress builder confidence.

The NAHB survey was conducted in the two weeks immediately following Hurricane Sandy so the Housing Market Index does reflect builder sentiment during that period. All regions of the country posted confidence gains in November.

The South Region showed a 4-point gain to 43; the West Region showed a 3-point gain to 47; the Midwest Region showed a 3-point gain to 45; and the Northeast Region showed a 2-point gain to 31.  

Despite the gains, builders nationwide still report challenges with home appraisals and tight credit conditions. In addition, a shortage of buildable lots in some areas is limiting the ability for home builders to put more single-family homes on the market.

As builder confidence grows, today’s buyers should prepare for the possibility of higher home prices. Confident sellers are less likely to make price concessions or to offer free upgrades.

If you are in the market for a new home, therefore, the time between now and the New Year may be the best opportunity to make a bid on a home. Starting next year, low prices may be gone.

7 11, 2012

Improving Market Index Swells To 125 In November

Improving Market Index 125 MarketsThe U.S. economy continues to improve.

The National Association of Homebuilders released its Improving Markets Index Tuesday. The report attempts to identify U.S. metropolitan areas in which the economy is improving, demonstrating “measurable and sustained growth”.

125 U.S. markets are qualified as “improving” this month, a 22-market jump from the month prior and and all-time high for the index which launched late last year.

Compared to November 2011, this month’s IMI has climbed more than four-fold, rising from last year’s reading of 30. This jump suggests that housing recovery is firmly taking root, helping to generate needed jobs and economic growth across much of the country.

So what qualifies a market as “improving”? The NAHB uses strict criteria.

First, the group gathers data from the three separate, independent sources :

  1. Employment growth from the Bureau of Labor Statistics
  2. Housing price appreciation from Freddie Mac
  3. Single-family housing permits growth from the U.S. Census Bureau. 

Next, for each of the above data sets, the National Association of Homebuilders separates for local data in each U.S. major metropolitan area.

And, lastly, armed with data, the NAHB looks for areas in which growth has occurred for all three data points for six consecutive months; and for the most recent “bottom” is at least six months in the past.

In this way, the Improving Market Index doesn’t just measure housing market strength — it measures general economic strength. 

Of the 22 markets added to the Improving Market Index in November, the following cities were included : San Diego, California; Gainesville, Florida; Omaha, Nebraska; Louisville, Kentucky; and Charlotte, North Carolina.

Several markets dropped off the list, too, including Hanford, California; Orlando, Florida; Terre Haute, Indiana; and Greenville, North Carolina.

The complete list of 125 metropolitan areas on November’s IMI, plus breakouts of the metropolitan areas newly added and dropped is available online at http://www.nahb.org/imi.

17 10, 2012

Home Builder Confidence Moves To 6-Year High

NAHB Housing Market IndexAs home prices rise, so does home builder confidence.

Tuesday, the National Association of Homebuilders reported its monthly Housing Market Index (HMI) at 41, a one-tick improvement from September and the highest HMI value since June 2006 — a span of 77 months.

The Housing Market Index is a homebuilder confidence indicator. When it reads 50 or better, the HMI suggests favorable conditions for home builders nationwide. Readings below 50 suggest unfavorable conditions for builders.

The HMI has not crossed 50 since April 2006 but the index has been making a run since last year, nearly tripling since the 14 reading of last year’s September.

In addition, builder confidence has climbed for six straight months.

For buyers of new construction, the Housing Market Index may help to set market expectations for the rest of 2012, and into early-2013. This is because the NAHB Housing Market Index is constructed as a composite survey, measuring builder sentiment in three specific areas — current home sales, future home sales, and buyer foot traffic.

What’s good for builders, though, may not be good for buyers.

When builders expect business to improve, they may be less willing to make concessions on price or product, holding home prices high and removing seasonal sales incentives.

This month, home builders are seeing strength in each of the three surveyed areas :

  • Current Single-Family Sales : 42 (Unchanged from September)
  • Projected Single-Family Sales : 51 (Unchanged from September)
  • Buyer Foot Traffic : 35 (+5 from September)

All three values are at multi-year highs but it’s the level of foot traffic that may concern today’s home buyers. Builders report foot traffic through model units to be at the highest rate since mid-last decade. This, combined with a shrinking supply of homes for sale, has contributed to a rise in new home sale prices and suggests even higher home prices in 2013.

Like most of the U.S. housing market, new construction appears to have bottomed in October 2011. One year later, the market looks stronger.

10 10, 2012

103 Metro Areas On The “Improving” U.S. Markets List

NAHB Improving Market Index

It’s not just the housing market that’s improving nationwide — it’s the economy overall.

The number of U.S. metropolitan areas showing “measurable and sustained growth” climbed to 103 this month. The data is measured by the Improving Markets Index, a monthly metric from the National Association of Homebuilders.

The Improving Market Index is meant to identify which U.S. markets are experiencing broad economic growth — not just growth in terms of housing.

The index’s conclusions are based on three data series — each collected separately; each from a different division of the U.S. government; and, each tied to specific local economic conditions.

Those three data series are :

  1. Employment Statistics (from the Bureau of Labor Statistics)
  2. Home Price Growth (from Freddie Mac)
  3. Single-Family Housing Growth (from the Census Bureau)

After collating the data, the National Association of Homebuilders evaluates the reports as a group for each specific major metropolitan area.

A metropolitan area can be cited as “improving” only if the following two conditions are met. One, all three data series show expansion and/or growth as compared to 30 days prior; and, two, none of the data series have “bottomed” within the last six months.

As a result of its methodology, the Improving Market Index specifically passes over short-term growth bursts in a market, isolating for areas with long-term, sustainable growth instead.

Furthermore, “improving” cities may be more apt to outperform other U.S. cities in the months and years ahead, rendering them ideal for relocating buyers in search of long-term employment and income opportunities, as well as real estate investors in want of healthy, stable markets.

33 states are represented in the October Improving Market Index, plus the District of Columbia. 11 new areas were added to the list as compared to September and just 7 dropped off.

The newly-added areas include State College, Pennsylvania and Raleigh, North Carolina. Cities falling off the list for October include Lakeland, Florida.

The complete Improving Markets Index is available for download at the NAHB website.

19 09, 2012

Homebuilder Confidence Rises Again; Tops 40

HMI September 2010 - 2012Home builder confidence continues to make new highs. 

As reported by the National Association of Home Builders, the Housing Market Index, a measure of builder confidence, rose to a reading of 40 in September — its highest mark since June 2006.

The index is now higher through five straight months and 11 of the last 12.

For home buyers , the survey may be signaling higher new home prices ahead; when builders are more confident in housing, they’re may be less likely to make concessions in price, and to “sweeten” deals with free upgrades and/or subsidized mortgage rates.

The Housing Market Index is published monthly, based on responses to a 3-question survey that the NAHB sends to its members. The questions cover three distinct parts of a builder’s business, each requiring a simple, one-word answer.

Builders are asked to respond with “Good”, “Fair” or “Poor”; or, “High”, “Average”, “Low” to the following three comments :

  • Rate market conditions for the sale of new homes today
  • Rate market conditions for the sale of new homes 6 months from today
  • Rate the foot traffic of prospective new home buyers

All three survey components showed an increase from August with buyer foot traffic rating at its highest point in more than 6 years. This is especially noteworthy because as the number of prospective buyers increases, so does competition for homes for sale.

There are currently just 142,000 new homes for sale nationwide, the stock of which will “sell out” in 4.6 months at the current pace of sales.

Not since October 2011 has the national home supply been above six months, the consensus dividing line between bull and bear market. Today’s new construction market favors builders and builders know it.

If you’re planning to buy new construction later this year or into early-2013, consider moving up your time frame. Homes may be for sale, but they won’t likely be as inexpensive as they are today.

12 09, 2012

Improving Market Index Climbs To 99

Improving Market Index September 2009The number of U.S. housing markets showing “measurable and sustained growth” has increased by 19 this month, according to the National Association of Homebuilders’ Improving Market Index.

The Improving Market Index is a monthly report meant to identify U.S. markets in which economic growth is occurring broadly — not just in terms of home prices.

The IMI’s conclusions are based on three separately-collected data series, each from a different division of the U.S. government and each tied to specific local economic conditions.

In this way, the Improving Market Index gives a better idea of which markets will outperform averages in the months and years ahead.

The three data series incorporated into the Improving Market Index are :

  1. Employment Statistics (from the Bureau of Labor Statistics)
  2. Home Price Growth (from Freddie Mac)
  3. Single-Family Housing Growth (from the Census Bureau)

The National Association of Homebuilders evaluate the reports for each major metropolitan area and then deems a given one “improving” if two conditions are met. First, all three data series must indicate growth in the current month and, second, at least 6 months have passed since each of the data points’ respective “bottoms”.

The IMI ignore short-term spurts, in other words, and attempts to identify those areas showing long-term, sustainable growth. For relocating home buyers, “improving” cities may also offer better long-term employment and income opportunities. 

33 states are represented in the September Improving Market Index, as well as the District of Columbia. 31 new areas were added to the list as compared to August and just 12 dropped off.

The newly-added areas include Sacramento, California; Jacksonville, Florida; and Waco, Texas. Cities falling off the list for September include Dover, Delaware.

The complete Improving Markets Index is available for download at the NAHB website. For a better gauge of what’s happening on a local level, however, talk to a local real estate agent.

16 08, 2012

Homebuilder Confidence Rises To 5-Year High

NAHB HMI 2010-2012Home builder confidence rises again.

For August 2012, the National Association of Homebuilders reports the monthly Housing Market Index at 37 — an increase of more than 100% from one year ago and the highest HMI value since February 2007.

The Housing Market Index is an indicator of homebuilder confidence and when it reads 50 or better, the HMI suggests favorable conditions for home builders. Readings below 50 suggest unfavorable conditions for builders.

Despite the recent rise in home builder attitudes, however, the Housing Market Index remains mired below 50 where it’s been since April 2006.

For new construction home buyers , the HMI may offer insight into the market for new homes through the end of this year. This is because the NAHB Housing Market Index is a composite survey, meant to gauge builder sentiment in three specific areas — current business, future business, and buyer activity.

When all three fronts are rising, it points to an improving market for sellers (i.e. home builders). Unfortunately, though, what’s good for sellers can be damaging to buyers. Builders are less willing to make concessions on price or product when markets are getting stronger.

In August, home builders saw strength across all three categories :

  • Current Single-Family Sales : 39 (+3 from July)
  • Projected Single-Family Sales : 44 (+1 from July)
  • Buyer Foot Traffic : 31 (+3 from July)

Especially noteworthy in the August HMI is that builders project more sales for the next six calendar months than they have projected at any time in the last 5 years. With mortgage rates at all-time lows and buyer foot traffic growing, it’s no wonder confidence is high.

When demand for homes is strong amid stagnant or falling supplies, home prices rise and that’s exactly what we’re seeing in many U.S. markets. It’s a good time to be a home buyer today, but market momentum appears to be shifting.

If you’re in the market for a newly-built home, therefore, the best “deal” may be the one you get today. Next year, your costs may be higher. 

15 08, 2012

Home Affordability Sinks For The First Time In 12 Months

Home Affordability Index 2012 Q2Rising home prices are taking a toll on today’s home buyers. For the first time in 4 quarters — and despite falling mortgage rates — home affordability is sinking. 

Earlier this week, the National Association of Home Builders reported the Home Opportunity Index, a measure of home affordability, down to 73.8 for the second quarter of the year. This marks the metric’s first “down” quarter since the second quarter of 2011, and is its lowest reading since December 2010.

A home is considered “affordable” when its payments meet standard mortgage underwriting criteria for families earning the local median income. This definition is used for homes across all U.S. markets.

73.8% of homes sold last quarter were affordable to households earning the national median income of $65,000. This is the 13th straight quarter dating back to 2009 that the index surpassed 70. Prior to 2009, the Home Opportunity Index had not crossed 70 even one time.

Like all real estate data, home affordability varied by locale.

In the Midwest, for example, affordability was highest. 7 of the top 10 most affordable markets nationwide were spread throughout the nation’s heartland. An Alaskan city took the top spot.

The top 5 most affordable cities for home buyers in Q2 2012 were:

  1. Fairbanks, AK (98.7%)
  2. Mansfield, OH (98.1%)
  3. Springfield, OH (95.9%)
  4. Carson City, NV (95.4%)
  5. Kokomo, IN (95.4%)

At #23, Ocala, Florida (91.7%) was the top-ranked South Region city last quarter.

By contrast, the Northeast Region and Southern California remained among the least affordable housing markets nationwide. Led by the New York-White Plains, NY-Wayne, NJ area, 9 of the 10 least affordable areas were in the Mid-Atlantic and California, and for the 17th consecutive quarter the New York metro area was ranked “Least Affordable”.

Just 29.4 percent of homes were affordable to households earning the area’s median income there, down from 31.5 percent three months ago.

The rankings for all 225 metro areas are available for download on the NAHB website.

9 08, 2012

Improving Market Index Spans 32 States, District Of Columbia

Improving Market Index

80 U.S. metropolitan markets are showing “measurable and sustained growth” this month, according to the National Association of Homebuilders’ Improving Market Index.

It’s good news for the economy and good news for housing. 

The NAHB’s Improving Market Index is meant to identify U.S. markets in expansion. It’s a composite of the three distinct data sets which, as a group, present a more holistic view of a given city’s growth :

  1. From the Bureau of Labor Statistics, the IMI tracks employment figures
  2. From Freddie Mac, the IMI tracks home price data
  3. From the Census Bureau, the IMI tracks single-family building permits

The home builder trade group compiles this data and, in order for a given metropolitan area to earn the label “improving”, the area must meet two specific growth conditions.

First, in a given city, each of the above data sets must show growth or expansion in the current calendar month. If one of the three do not show growth, the city cannot qualify.

Second, in a given city, at least six months must have passed since the most recent trough of all of the above metrics.  It’s this second clause that can make the Improving Market Index meaningful.

By focusing on long-term growth trends within a city, the IMI ignores “blips” and seasonal irregularities. 

The August IMI shows 80 improving markets nationwide, a 4-city decrease from July 2012. 5 new cities were added to the index including Miami, Florida; Terre Haute, Indiana; and Lubbock, Texas. Nine cities fell off the list.

Overall, 32 states are represented in the IMI, and the District of Columbia, too.

For today’s home buyers, the IMI doesn’t provide much actionable information. It doesn’t show home prices, for example, nor the current demand for homes. What it shows is the strength of local economies, though, and in many cases, as the economy heats up, so do home prices.

The complete Improving Markets Index is available for download at the NAHB website.

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