Following four consecutive months of improvements, builder confidence in market for newly built, single-family homes held unchanged in September with a reading of 58 on the Housing Market Index (HMI) released by National Association of Home Builders (NAHB) and Wells Fargo.
“While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of the buyers due to the sharp increase in interest rates,” said NAHB chairman Rick Judson, a homebuilder from Charlotte, N.C. “Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past.”
The HMI gauges builder perceptions of current single-family home sales and sales expectations in the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average,” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
HMI component indexes were mixed in September. While the component gauging current sales conditions held unchanged at 62, the component gauging sales expectations in the next six months declined three points to 65 and the component gauging traffic of prospective buyers increased one point, to 47.
All four regions posted gains in their three-month moving average HMI scores in September, including a two-point gain to 41 in the Northeast, a four-point gain to 64 in the Midwest, a two-point gain to 56 in the South and four-point gain to 61 in the West, respectively.