Mortgage News in the Carolinas
Posts tagged Housing Market Index
Homebuilders Getting Optimistic; Higher Home Prices Ahead?
082 days
by Geoff Brown
in Housing Analysis
Homebuilder confidence continues to rise.
Just two months after falling to a multi-month low, the Housing Market Index surged again in November, climbing another three points to 21. It’s the second straight month that the HMI posted a 3-point gain, catapulting the index to an 18-month.
The Housing Market Index is monthly report from the National Association of Homebuilders. It’s meant to measure confidence among the nation’s homebuilders, scored on a scale of 1-100.
When homebuilder confidence reads 50 or better, it reflects favorable conditions for homebuilders. Readings below 50 reflect unfavorable conditions.
The Housing Market Index has not read north of 50 since April 2006.
As an index, the HMI is actually a composite reading; the result of three separate surveys sent to homebuilders each month. The National Association of Homebuilders asks it members about current single-family home sales volume; projected single-family home sales volume over the next 6 months; and current “foot traffic”.
In November, builder responses were stronger in all 3 categories :
- Current Single-Family Sales : 20 (+3 from October)
- Projected Single-Family Sales : 25 (+1 from October)
- Buyer Foot Traffic : 15 (+1 from October)
And, beyond the headline data, there is an important, noteworthy item in this month’s Housing Market Index.
In November, “Current Single Family Sales” climbed 3 points for the second straight month, and is now at the highest point since May 2010 — the month after last year’s home buyer tax credit expired. And, this increase in sales volume is occurring as new home construction is falling, thereby reducing home inventory nationwide.
That’s an important point for Charlotte home buyers.
With more new home sales and fewer new home listings, prices are likely to increase into 2012. Especially with home builders predicting higher sales levels over the next 6 months, and seeing higher levels of buyer foot traffic through their properties today.
For now, though, home prices are stable and mortgage rates are low. This creates low-cost homeownership throughout Carolinas , and helps new home construction remain affordable.
If you’re in the market for new home construction, the next 60 days may prove to be your best time to get “a deal”.
Led By Expectations Of A Strong Fall Season, Homebuilder Confidence Bounces Back
0203 days
by Geoff Brown
in Housing Analysis
Homebuilder confidence is bouncing back.
One month after an unceremonious dip highlighted by poor sales figures and dim prospects for the future, the National Association of Homebuilder’s Housing Market Index rebounded two points to 15 in July.
The monthly Housing Market Index is scored on a 1-100 scale. Readings above 50 indicate favorable conditions for homebuilders and the “new home” market. Readings below 50 indicate unfavorable conditions.
The Housing Market Index has not read higher than 50 in more than 5 years.
As a housing metric, the HMI is actually a composite of three separate surveys, self-reported by builders. The surveys ask about current single-family home sales volume; projected single-family home sales volume; and current buyer foot traffic levels.
In July, the responses read as follows :
- Current single-family sales : 15 (+2 from June)
- Projected single-family sales : 22 (+7 from June)
- Buyer foot traffic : 12 (Unchanged from June)
The most noteworthy reading is the rapid rise in Projected single-family home sales. Although builders aren’t experiencing more foot traffic, they think sales will spike between now and the New Year.
That could spell bad news for Charlotte home buyers.
When builders harbor higher expectations for the future, they’re less willing to make concessions for upgrades and/or price. Your likelihood of getting “a great deal” as a buyer diminishes.
That’s why it’s good that mortgage rates are still so low. Low mortgage rates help with home affordability and can offset slight jumps in sale price.
Mortgage rates remain just above their lowest levels of 2011, and of all-time.
As Buyer Traffic Grows, Homebuilder Confidence Slips
0294 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.
Sagging Homebuilder Confidence Opens The Door For Good Deals
0567 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.
