Mortgage News in the Carolinas
Posts tagged HMI
As Buyer Traffic Grows, Homebuilder Confidence Slips
0397 days
by Geoff Brown
in Housing Analysis
Homebuilder confidence is falling — a good sign for buyers of newly-built homes.
According to the National Association of Homebuilders, the Housing Market Index slipped one point to 16 in April. It’s the 5th time in 6 months that the index read 16 — a figure exactly in line with the 1-year average, but still considered “poor”. The Housing Market Index reports on a scale of 1-100.
Values of 50 or better representing “favorable conditions”. Values below 50 are considered “unfavorable”.
It’s been 5 years since the Housing Market Index read north of 50.
As an index, the HMI is actually a composite of three separate surveys, the results of which can be as telling as the final, compiled results. The surveys focus on specific aspects about a homebuilder’s business, and use the broader responses to gauge overall market “sentiment”.
The 3 questions are:
- How are market conditions for the sale of new homes today?
- How are market conditions for the sale of new homes in 6 months?
- How is prospective buyer foot traffic?
In April, interestingly, home builders felt market conditions were worse across the board, but still cited higher buyer foot traffic. This may be the result of a combination of rising mortgage rates and falling home values. Both tend to be bad for builders, and both tend to spur home buyers into action.
As a home buyer this spring, therefore, use the HMI data to your advantage. When home builders feel less confident on housing, buyers can often exact better concessions and/or upgrades during the negotiation process.
And, so long as mortgage rates continue to rise, that pressure on builders should build.
As Buyer Foot Traffic Rises, So Does Homebuilder Confidence
0579 days
by Geoff Brown
in Homebuilders
As the “pulse of the single-family housing market”, the Housing Market Index is a monthly product of the National Association of Homebuilders. Its scores range from 1-100, with a reading a 50 or better suggesting “favorable conditions” for builders.
Because of its methodology, the Housing Market Index can offer excellent insight into the Charlotte market for newly-built homes. This is because its value is a composite of three survey questions:
- How are market conditions today?
- How do market conditions look 6 months from now?
- How is the prospective traffic of new buyers for new homes?
Builder responses are collected, weighted, then presented as the Housing Market Index.
According to the NAHB, October’s HMI reading of 16 is its highest value in 5 months. The uptick hints that the market for newly-built homes may rebound more quickly that this summer’s weak new homes sales figures would otherwise suggest.
You’ll remember that, between April and August, the number of new homes sold per month fell by 30 percent and the available, new home inventory climbed 2.3 months.
This month, though, builders report much better foot traffic and, as a result, have raised their expectations for the next six months of sales. Low mortgage rates are likely aiding the optimism, too.
As compared to 1 year ago, average, 30-year fixed mortgage rates are lower by 0.75 percent, a payment savings of $45 per $100,000 borrowed.
Sagging Homebuilder Confidence Opens The Door For Good Deals
0670 days
by Geoff Brown
in Homebuilders
Builder confidence in the housing market slipped this month, according to the National Association of Homebuilders’ monthly Housing Market Index.
The Housing Market Index is actually a weighted composite of 3 separate surveys. One measures current single-family sales; one measures projected single-family sales; and one measures traffic of prospective buyers.
All three surveys were down in July:
- Single-Family Sales : From 17 (June) to 15 (July)
- Single-Family Project : From 22 (June) to 21 (July)
- Buyer Foot Traffic : From 13 (June) to 10 (July)
The HMI’s July reading of 14 puts confidence at its lowest point since April 2009.
For home buyers in Charlotte , a drop in builder confidence could create an opportunity for negotiation.
Remember, it wasn’t too long ago that most builders were flush with home inventory, unable to find willing buyers. To help move product at that time, builders dropped prices and offered incentives including free upgrades. If confidence continues to sag going forward, home purchase deals of that nature may return — especially as the foreclosure market gets larger.
See, in the past, builders’ main competition for buyers were the existing home sellers. Today, builders compete with the existing home sellers and the banks with REO.
It’s a terrific time to be a home buyer, in other words — sellers are fighting for you. It’s no wonder sellers have little leverage anymore. Couple that with all-time low mortgage rates and affordability for homes is at an all-time high.
If you’re planning to buy a home later this year, you may want to consider moving up your time frame. The market looks ripe for good deals this summer.
