Housing Market Index Hits Near-Historic Low
- Published: Sunday, 01 June 2008 08:00
Builder confidence in the market for new single-family homes remained unchanged in March, according to a recent NAHB/Wells Fargo Housing Market Index (HMI). 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).
ìOur 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,î notes NAHB President Sandy Dunn, a home builder from Point Pleasant, W.Va.
Adds NAHB Chief Economist David Seiders: ìNAHB applauds the Federal Reserve's aggressive actions 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.
ìWith 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,î he adds. ìA 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 during the second half of 2008.î
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 ìgood,î ìfairî or ìpoor.î The survey also asks builders to rate traffic of prospective buyers as either ìhigh to very high,î ìaverageî or ìlow to very low.î 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 positive.
Two out of three of the HMI 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.