Tag Archives: NAHB

Homebuilder Confidence Spikes To 6-Year High

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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 in Phoenixville and 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 throughout Pennsylvania 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.

Improving Market Index Swells To 125 In November

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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.

Home Builder Confidence Moves To 6-Year High

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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 Phoenixville 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.

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

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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 from King of Prussia 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.

Homebuilder Confidence Rises Again; Tops 40

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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 in Collegeville , 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 in Pennsylvania 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.

Improving Market Index Climbs To 99

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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 in Phoenixville on a local level, however, talk to a local real estate agent.

Homebuilder Confidence Rises To 5-Year High

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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 in Phoenixville , 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 Pennsylvania 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. 

Home Affordability Sinks For The First Time In 12 Months

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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 — including for homes in Phoenixville.

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.

Improving Market Index Spans 32 States, District Of Columbia

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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 Phoenixville 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.

Homebuilder Confidence Doubles In 12 Months

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NAHB Housing Market IndexHomebuilder confidence is soaring.

For the second time in three months, the National Association of Homebuilders reports that the Housing Market Index made sizable gains. 

The Housing Market Index measures homebuilder confidence in the new construction market and is scored between 1-100. Readings above 50 indicate favorable conditions in the single-family new home market. Readings below 50 indicate poor conditions.

The Housing Market Index leaped to 35 in July, a 6-point improvement and the index’s biggest one-month gain since September 2002.

The HMI is now up 14 points this year and is more than double its value of one year ago.

The Housing Market Index itself is a composite of three separate survey questions sent to NAHB members monthly. The questions are basic :

  1. How are market conditions for the sale of new homes today?
  2. How are market conditions for the sale of new homes in 6 months?
  3. How is prospective buyer foot traffic?

For July 2012, home builders reported huge gains. Current home sales are up 6 points; sales expectations for the next six months are up 11 points; and buyer foot traffic is up 6 points.

All three survey answers made 5-year highs. Not since 2007 has sales volume and foot traffic been as strong, and over the next 6 months, builders expect a blow-out finish to the year.

It’s no surprise, either.

Low mortgage rates throughout Pennsylvania have lowered monthly housing payments to levels below monthly rent for a comparable home. Plus, programs such as the FHA 3.5% downpayment program continue to help first-time buyers get in homes.

There is a downside to rising homebuilder confidence, however. When builders feel more comfortable about their business and the prospects for the future, they’re less likely to make sales concessions to to offer free upgrades. If you’re shopping for new construction, therefore, consider moving up your time frame.

Home affordability remains historically high today. It may not be so tomorrow.