Builders Cautiously Optimistic as Housing Market Index (HMI) Holds Steady
The National Association of Home Builders in conjunction with Wells Fargo performs a nationwide survey of its builder members to determine the status of the housing market according to the builders’ attitudes towards it. Their results are published each month in the NAHB/Wells Fargo Housing Market Index (HMI). According the HMI, builder confidence has been holding steady for the last 3 months with a one point increase in score for the month of April, 2014 to 47. How the NAHB rates whether or not this is a good number is that anything above 50 will give builders and new home buyers alike to heave a huge sigh of relief. However, before jumping to conclusions that 47 is still a negative confidence rating for builders at the moment, keep in mind that builders have scored over 50 points from May, 2013 – December, 2013 of last year. Even if levels have dropped slightly below 50, they are still right near 50 and have been holding for the last 3 months.
It has been proven over and over again that Southeast Louisiana did not go through as severe crash in its real estate market as was felt throughout the rest of the country – even though, it did have to go through its fair share, especially St. Tammany Parish. Because of this, builder confidence in this area seems to be exceptionally high if the number of new builders by new lots for sale at Bedico Creek Preserve are any indication. The number of builders in our subdivision have almost doubled over the course of one year, and the number of homes being built and quickly sold is also showing a huge amount of buying activity in our community. Bedico Creek Preserve is even opening a new Neighborhood within the subdivision called Cypress Crossing which is featuring just 3 builders who are building spec homes for sale for those home buyers who are looking to be able to purchase a home that has already been built.
NAHB Chairman Kevin Kelly predicts that with the advent of spring after such rough winter weather, the real estate industry will continue to show gradual improvement and possibly solidify builders’ opinions about the market.
“Job growth is proceeding at a solid pace, mortgage interest rates remain historically low and home prices are affordable,” said NAHB Chief Economist David Crowe. “While these factors point to a gradual improvement in housing demand, headwinds that are holding up a more robust recovery include ongoing tight credit conditions for home buyers and the fact that builders in many markets are facing a limited availability of lots and labor.”
There are 3 factors by which the HMI gauges builder confidence – current sales conditions, prospective buyers, and expectations for future sales. The good news is that 2 out of 3 were above 50 (considered good by builders) with current sales conditions at 51 and futures sales expectations coming in at 57. The future of new home sales is looking bright not only at Bedico Creek in St. Tammany Parish but also nationwide.
