May
17

Home-Builder Confidence at Highest Point Since ’07

May 17, 2010

Good news from the National Association of Home Builders: Builder confidence in new home sales is at its highest level in close to three years.

Builders have a reason to smile this month.

The NAHB on Monday released this month’s Home Market Index (HMI), which shows the demand for new construction and builder confidence in new-home sales. The HMI for May is 22; the last time it rose to this number was August 2007.

It’s a three-point increase from April’s HMI of 19. In fact, there are three component indexes of the HMI, and each posted three-point gains this month: The component gauging current sales conditions rose to 23, the highest since July 2007; the component gauging sales expectations over the next six months rose to 28, the highest since November 2009; and the component gauging prospective buyers rose to 16, the highest since September 2009.

Increases are great, but keep in mind that the index runs from 0-100, so a rating of 50 would be average.

“Obviously we still have a long way to go,” said NAHB Chief Economist David Crowe. “The really encouraging part of today’s HMI is that sales expectations for the next six months continued to gain, despite the expiration of the home buyer tax credits at the end of April.

“This means builders are more comfortable that the market is truly beginning to recover, and that positive factors for buying a new home – low interest rates, great selection, stabilizing prices, and a recovering job market – are taking the place of tax incentives to generate buyer demand.”

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