Research >> Economics
Builder Confidence improved significantly in April
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Builder confidence in the market for newly built, single-family homes improved significantly in April as consumers rushed to take advantage of home buyer tax credits set to expire at the end of the month, according to results of the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI surged four points to 19 in April, its highest level since September of 2009.
Home builders reported some real improvement in current sales activity and traffic of prospective buyers through their model homes over the past month. While we remain cautious about what future months will bring, it's great to have this positive momentum at the start of the spring home buying season.
An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders' view of the marketplace in April. Meanwhile, builders have a more neutral view of what may come in the next six months, and are very aware of the many factors that continue to drag on housing at this time - including the critical shortage of credit for new and existing projects, problems with inaccurate appraisals, and the ongoing flow of foreclosed properties on the market. Greater economic growth, particularly in the job market, and the abatement of these housing issues are needed to help move home building to a more sustained recovery.
The HMI's four-point gain to 19 this month returned it to where it was in September of 2009, just prior to the expiration of the last home buyer tax credit. The component gauging current sales conditions rose by five points to 20 - the strongest gain in that index since 2003 - while the component gauging traffic of prospective buyers rose a solid four points, to 14. However, the index gauging sales expectations in the next six months registered only a marginal one-point increase to 25, an indication of builders' continued cautious outlook.
Posted: April 15, 2010 Thursday 01:00 PM