Builders Optimistic About New Home Market

Because builders have an unique perspective on the market for new homes, the National Association of Home Builders tracks their outlook on current buyer traffic, sales conditions, and future sales expectations as part of their monthly Housing Market Index. The index measures builder confidence on a scale where any number above 50 indicates more builders view conditions as good than poor. In May, the index dropped two points to 54. Despite the decline, however, the index remains above 50 and is now nine points higher than it was at the same time last year. David Crowe, NAHB’s chief economist, says potential home buyers are feeling cautious and want to be more stable financially before purchasing a house. “On the bright side, the HMI component measuring future sales expectations has been tracking upward all year, mortgage rates remain low, and house prices are affordable,” Crowe said. “These factors should spur the release of pent-up demand moving forward.” In fact, though the components measuring current conditions fell slightly, sales expectations for the next six months increased one point to 64, matching the generally optimistic forecasts of many industry experts and economists. More  here.