Builders’ confidence in the market for new single-family homes grew as the National Association of Home Builders' housing market index rebounded to 58 in January from 56 in December.
IFR's poll of economists predicted the index would be 56.
“The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment,” NAHB Chairman Randy Noel said. “Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months.”
“Builders need to continue to manage rising construction costs to keep home prices affordable, particularly for young buyers at the entry-level of the market,” according to NAHB Chief Economist Robert Dietz. “Lower interest rates that peaked around 5 percent in mid-November and have since fallen to just below 4.5 percent will help the housing market continue to grow at a modest clip as we enter the new year.”
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." 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 good than poor.
The current single-family home sales index grew to 63 from 61, the sales expectations index for the next six months climbed to 64 from 61; and the traffic of prospective buyers index crept to 44 from 43.
