Homebuilders More Optimistic Over the Next Six Months

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New home builders are looking ahead, and the National
Association of Home Builders (NAHB) says this optimism was reflected in its
Housing Market Index (HMI) for February. 
While the total HMI, which is also sponsored by Wells Fargo, was
unchanged from January at 72, its most forward-looking component hit a post-recession
high.

The HMI is derived from a monthly survey NAHB conducts among its new-home
builder members. The survey asks builders for their perceptions of current
market conditions for newly constructed homes and their expectations for-those
conditions over the next six months, ranking each as “good,” “fair” or “poor.”
The survey also asks builders to 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 conditions as good than poor.

It was the question about conditions six months in the future that showed
the strongest degree of confidence, gaining 2 points from January to a score of
80. The index measuring buyer traffic held steady at 54, and the component
gauging current sales conditions dropped one point to 78.

NAHB chief economist Robert Dietz said, “The HMI gauge of future sales
expectations has reached a post-recession high, an indicator that consumer
demand for housing should grow
in the months ahead. With ongoing job creation,
increasing owner-occupied household formation, and a tight supply of existing
home inventory, the single-family housing sector should continue to strengthen
at a gradual but consistent pace.”

He added that while the index shows demand conditions are positive, supply-side
construction hurdles need to be managed
, as scarce labor and building material
price increases remain top concerns.

Regional HMI scores are expressed as three-month moving averages. The
Midwest rose two points to 72, the South increased one point to 74, the West
remained unchanged at 81, and Northeast fell two points to 56.



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