NAHB: Housing Market Index Flat in March

NAHB Housing Market Index Flat in MarchBuilder sentiment held steady in March as headwinds in housing markets affected homebuilder confidence, but National Association of Home Builders Chairman Greg Ugalde said that builders were looking forward to a “solid spring home-buying season.” Builder sentiment mirrored February’s index reading of 62; analysts expected an uptick to 63.

Any Housing Market Index reading over 50 indicates that more builders than fewer have a positive outlook on housing market conditions. The average reading for 2018 was 67, which indicated that builders were less confident current market conditions for new homes than in 2018.

HMI Component Readings Mixed in March

Three sub-readings used to calculate the monthly Housing Market Index reading showed builder confidence in current market conditions rose two points to 68; Builder confidence in market conditions over the next six months rose three points to 71 and homebuilder confidence in buyer traffic dipped four points to 44. Readings for buyer traffic seldom exceed the benchmark reading of 50.

The National Association of Home Builders said in a statement that housing markets are “stabilizing,” but did not say that housing markets were growing. Economists and housing market analysts rely on the Housing Market Index for clues about future housing production. Demand for new homes has been strong for years, but headwinds including tariffs on building materials and labor shortages continued to impact construction rates. More new homes on the market could ease pent-up demand for homes, but rapidly rising home prices are making home ownership less feasible for first-time and moderate-income home-buyers.

Imbalance Between New Homes Built and Consumer Needs

Analysts called out a problematic trend in meeting demands for new homes. Price points are frequently beyond affordable for most buyers, and new housing developments often trend toward larger homes with higher prices. Analysts said that from 2010 to 2017, the average size of new homes increased by 300 square feet while household size decreased over the same period. Lower mortgage rates benefit homebuyers concerned over affordable house payments, but strict mortgage qualification requirements limit the number of potential home buyers that can qualify for mortgage amounts needed to buy homes.

If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional.

NAHB: Home Builder Confidence Grows After Lowest Level in 3 Years

NAHB Home Builder Confidence Grows After Lowest Level in 3 YearsAfter two months of declining builder confidence, the National Association of Home Builders Housing Market Index gained two points in January with a reading of 58. Component readings of the HMI were also higher with builder confidence in current market conditions rose two points to an index reading of 63. Builder confidence in housing market conditions over the next six months rose three points to 64.

The index for buyer traffic in new housing developments rose one point to 44. While index readings above 50 indicate positive market conditions, the index reading for buyer traffic is typically lower than 50.

Lower Mortgage Rates Compel Home Buyers to Act

Falling mortgage rates contributed to the uptick in home builder confidence, but affordability continued to impact first-time and moderate-income home buyers. Robert Dietz, NAHB chief economist, said: “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.”

Analysts suggested that builders could consider offering deeper discounts and incentives to buyers to increase sales of new homes. Homes not sold during November and December added to current inventories of new homes available, which provides home buyers with more choices and less competition for homes.

Home Builders Expect More Buyer Traffic

Lennar Corporation, a major home builder said that increased buyer traffic indicated that 2019 home sales would increase and that improving economic conditions were expected to improve housing market conditions and home sales in 2019.

Builders expect to face continued headwinds in 2019; affordability tops the list, but relatively low inventories of homes in some areas dampen buyer enthusiasm. Single-family housing starts are also expected to be lower than the long-term yearly average. As economic conditions improve for would-be home buyers, a slim supply of homes and high home prices present obstacles to buyers.

Your trusted home mortgage professional is one of your best partners in your next home buying or refinancing transaction. Be sure to contact them to discuss market conditions in your area.

NAHB: Home Builder Confidence Rises in May

The National Association of Homebuilders reported a two-point increase in builder confidence in May. The NAHB Housing Market Index reading increased from 68 in April to 70, which was the second-highest reading since the economic recovery started. May’s reading exceeded analyst expectations of a flat reading for May. Builder confidence rose as demand for homes continued to rise; this factor overrode builder obstacles including higher prices for lots and ongoing labor shortages. A new tariff on lumber was also expected to dampen builder confidence.

Component Readings Suggest Strong Builder Confidence in Current and Future Housing Markets

The monthly Housing Market Index is comprised of three components. Builder confidence in current housing market conditions rose two points to 76; the reading for builder confidence in market conditions for the next six months rose four points to 79. Builder confidence in buyer traffic in new homes dropped one point to 51, but overall, builder confidence in market conditions is strong as any NAHB Housing Market Index reading over 50 is considered positive.

Fewer Mortgage Applications: Home Buyers Dont Share Builder Optimism

According to the Mortgage Bankers Association, mortgage applications dropped 4.30 percent year-over-year in April, and were 20 percent lower than in March. While the Mortgage Bankers Association doesn’t report seasonal adjustments, fewer applications for purchase mortgages on new homes illustrated ongoing affordability challenges faced by first-time and moderate income home buyers.

High demand for available homes puts mortgage-dependent home buyers at a disadvantage when cash offers are in play. Rapid escalation of home prices creates difficulty for first-time and moderate income buyers as down payment and mortgage qualification requirements sideline buyers.

Increasing home builder sentiment has not corresponded to the number of new homes being built, which industry analysts consider the main solution to high demand for homes driven by short inventories of homes. First-time buyers are important to housing markets as they enable “move-up” buyers to sell their homes and buy new or larger homes.