Lower Interest Rates, Rising Consumer Confidence Boost Builder Sentiment
Builder confidence for newly built single-family homes rose in February by four points to 62, the National Association of Home Builders reported yesterday.
February marked the second consecutive month in which NAHB/Wells Fargo Housing Market Index posted across-the-board gains. The index measuring current sales conditions rose by three points to 67; the component gauging expectations in the next six months increased by five points to 68; and the metric charting buyer traffic moved up by four points to 48. Scores above 50 suggest conditions are more favorable for home buliders.
Regionally, three-month moving averages saw the South posted a one-point gain to 63 while the Northeast dropped two points to 43. The Midwest and West remained unchanged at 52 and 67, respectively.
NAHB Chief Economist Robert Dietz said ongoing reduction in mortgage rates in recent weeks, coupled with continued strength in the job market, are helping to fuel builder sentiment. “In the aftermath of the fall slowdown, many builders are reporting positive expectations for the spring selling season,” he said.
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., agreed. “Two consecutive increases in the NAHB Housing Market Index to start the year should alleviate some concerns over the degree of the slowdown in residential activity,” he said. “Lower rates have fueled near-term expectations.”
Last week, the Mortgage Bankers Association reported its Builder Applications Survey data for January showed mortgage applications for new home purchases jumped by 43 percent from December, although unchanged from a year ago.
MBA estimated new single-family home sales at a seasonally adjusted annual rate of 713,000 units in January, based on data from the BAS, an increase of 29.2 percent from the December pace of 552,000 units. On an unadjusted basis, MBA estimated 54,000 new home sales in January, an increase of 45.9 percent from 37,000 new home sales in December.
