Builder Confidence Holding Steady in September
Following four consecutive months of improvement, builder confidence in the market for newly built, single-family homes held unchanged in September with a reading of 58 on the NAHB/Wells Fargo Housing Market Index (HMI), released Sept. 17.
The HMI component gauging current sales conditions held unchanged at 62, while the component gauging sales expectations in the next six months declined three points to 65 and the component gauging traffic of prospective buyers increased one point, to 47. (Remember that any number over 50 indicates that more builders view sales conditions as good than poor.)
Meanwhile, all four regions posted gains in their three-month moving average HMI scores in September, including a two-point gain to 41 in the Northeast, a four-point gain to 64 in the Midwest, a two-point gain to 56 in the South and a four-point gain to 61 in the West, respectively. “While builder confidence is holding at the highest level in nearly eight years, many are reporting some hesitancy on the part of buyers due to the sharp increase in interest rates,” said NAHB Chairman Rick Judson. "Home buyers are adjusting to the fact that, while mortgage rates are still quite favorable on a historic basis, the record lows are probably a thing of the past.”
Chief Economist David Crowe agreed, saying, “Following a solid run up in builder confidence over the past year, we are seeing a pause in the momentum as consumers wait to see where interest rates settle and as the headwinds of tight credit, shrinking supplies of lots for development and increasing labor costs continue.
New England, Pacific States Have Most Regulated Housing Supplies
NAHB's economists recently took a look at a fascinating study that has provided the first-ever annual measure of housing supply regulations for the contiguous United States. Constructed by Peter Ganong and Daniel Shoag, the new housing supply regulation index examines the scaled count of state appeals court decisions that mention “land use.” States with a higher share of court decisions mentioning “land use” are thought to have more restrictive housing supply regulations. The study shows that in 2010, the state with the highest index score was Maine, followed by New Hampshire. Meanwhile, the state with the lowest index score was Alabama, followed by Louisiana. The map below splits states into quartiles based on the newly constructed index for 2010. Housing Production Rises in August
Led by a solid increase in single-family starts, nationwide housing production rose 0.9 percent to a seasonally adjusted annual rate of 891,000 units in August, according to figures released Wednesday by HUD and the U.S. Census Bureau. Meanwhile, construction of multifamily buildings slowed following a rebound in July. NAHB's Chief Economist David Crowe said the report reflects the gradual improvement in buyer confidence in the overall market and NAHB's recent surveys that indicate a solid outlook for single-family production. On the multifamily side, we are catching up with underlying rental demand, Crowe said, and expect to see additional multifamily starts in the future, but not as rapid a pace of growth as in the past.
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- Joanne Loftus