Continuing low mortgage rates and improving economic conditions are helping maintain a solid level of builder confidence in the market for new single-family homes, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.
The November HMI registered no discernible change in builder attitudes following an impressive four-point jump that brought the index in line with its highest level of the year, at 71, in October.
The component index gauging current single-family sales rose two points to 79 – its highest level of the year – in November. Meanwhile, the component index gauging sales expectations for the next six months and the component gauging traffic of prospective buyers each edged down two points, to 80 and 50, respectively.
“While rates on long-term mortgages have edged up marginally in the last few weeks, the average 30-year loan remains below 6 percent. That’s a key factor driving buyer demand right now,” said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, Miss.
“The basic story hasn’t changed,” agreed NAHB Chief Economist David Seiders. “As of the end of October, the average interest rate on a 30-year mortgage was 5.64 percent. That moved up slightly to 5.76 percent as of mid-November – still an exceptionally attractive rate. The result is builders’ continued confidence in the momentum of this housing market.”
The NAHB/Wells Fargo Housing Market Index is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Each month, builders report current sales of single-family homes and prospects for sales in the next six months as either “good,” “fair” or “poor.” They also rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
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