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Builder Confidence Remains Unchanged in March

by on March 18, 2008

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WASHINGTON, March 17 - Builder confidence in the market for new single-family homes remained unchanged in March, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released today. The HMI held firm at 20, which is near its historic low of 18 set in December of 2007 (the series began in January of 1985).

“Our surveys confirm what I’ve been hearing personally from builders across the country, which is that interested buyers are out there, but they are either reluctant to go ahead with a home purchase or they are unable to find mortgage financing they can afford,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W. Va.

“NAHB applauds the Federal Reserve’s aggressive actions over the weekend in response to escalation of financial market pressures, and we strongly encourage the Fed to ease monetary policy substantially when the Federal Open Market Committee meets tomorrow,” said NAHB Chief Economist David Seiders.

“With the deepening problems in today’s economy and financial markets, Congress and the Administration should enact additional stimulative measures, and the next round should be directed squarely at the housing sector,” he added. “A temporary home buyer tax credit, FHA modernization and GSE oversight reform are the three most important things that Congress can accomplish right now to help ensure that housing does not drag the economy into a full-blown recession. Provided that the necessary actions are taken promptly, a housing market recovery most likely would take shape by the second half of this year.”

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “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.

Two out of three of the HMI’s component indexes were unchanged in March from the previous month. The index gauging current sales conditions for newly built single-family homes held firm at 20 while the index gauging traffic of prospective buyers stayed at 19 following a significant gain in February. The index gauging sales expectations for the next six months edged downward by a single point to 26.

Regionally, the HMI was mixed, with the Northeast posting a two-point decline to 21, the Midwest holding even at 16, the South reporting a two-point gain to 26 and the West showing a one-point decline to 15.

Builder Confidence in Condo Market Declines

by on March 11, 2008

WASHINGTON, March 11–The Multifamily Condo Market Index (MCMI) ended 2007 on a low note, with the component of the index tracking builder confidence in current conditions standing at 18.8, down nearly 11 points from the same time a year ago, according to the National Association of Home Builders (NAHB).

“Given that the condo market became so overheated during the peak of the housing boom, it is not surprising that the market now continues to struggle, considering the difficulties in the mortgage sector and the fears about the economy in general,” said David Seiders, NAHB’s Chief Economist. “It is going to take time for the extra inventory to be absorbed.”

The index is derived from a quarterly survey of multifamily builders and developers, in which responses are rated on a scale of 0 to 100, with a rating of 50 generally indicating that the number of positive responses is about the same as the number of negative responses.

The component of the index that gauges current conditions in the condo market has not risen above 25 during any quarter of 2007.

Builder expectations for the next six months are only slightly more optimistic: The component tracking expectations stood at 29.2 in the fourth quarter of 2007. In the fourth quarter of 2006, this component of the index stood at 49.1.

Responding to a series of special questions that accompanied the MCMI survey for the fourth quarter, 28 percent of survey respondents reported higher or somewhat higher sale cancellation rates in the fourth quarter of 2007 compared to a year earlier. The average sales cancellation rate in the fourth quarter of 2007 was 19 percent; the median was 12 percent.

About two-thirds of builders reported lowering prices to bolster sales. The average price reduction was 11 percent. When asked about other marketing strategies being used to shore up sales, more than 70 percent of the respondents reported including optional items at no costs, paying closing costs or fees, or absorbing financial points for their buyers.

Builder Confidence Unchanged in November

by on November 19, 2007

WASHINGTON, Nov. 19 - Builder confidence in the market for new single-family homes remained unchanged in November due to continuing mortgage market problems, a substantial inventory overhang and ongoing concerns about the effects of negative media coverage, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The November HMI held even with October’s upwardly revised 19 reading, its lowest point since the series began in January of 1985.

“Consistent with what builders said in last month’s survey, many are reporting that their special sales incentives are having limited success in terms of getting buyers in the door,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif. Of particular concern, he noted, is that negative media reports are dissuading buyers and fueling unrealistic expectations regarding home price discounts.

“To be more specific,” Catalde said, “builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when, in fact, there is no such thing - all housing markets are local. As a result, some healthy markets are being unfairly impacted by this negative media coverage.”

“The message from today’s report is that builders do not see any significant change in housing market conditions as compared to last month,” said NAHB Chief Economist David Seiders. “While they continue to work down inventories of unsold homes and reposition themselves for the market’s eventual recovery, they realize it will be some time before market conditions support an upswing in building activity - most likely by the second half of 2008.”

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo 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.

In November, the index gauging current sales conditions for single-family homes remained flat at 18, while the index gauging sales expectations for the next six months declined a single point to 25. The index gauging traffic of prospective buyers rose two points to 17.

Regionally, the HMI results were mixed, with two regions reporting modest HMI gains and two reporting slight declines. The HMI for the Northeast gained one point to 27 and the HMI for the West gained three points to 18. Meanwhile, the HMI for the Midwest declined one point to 13 and the HMI for the South declined two points to 19.