Could the housing market be turning around? Builders seem to think so.
The NAHB/Wells Fargo Housing Market Index, which measures home builder confidence in the housing market, rose 5 points in April to a reading of 14. Overall, that does indicate a weak market (the index is out of 100), but it represents a big gain compared to the past several months, which have recorded single-digit readings.
The greatest leap came in builders’ single-family sales expectations for the next six months, which rose from a reading of 15 in last month to 25 in April, the highest it has been since September 2008, when the financial markets began seriously struggling.
The HMI’s other two components also improved in April. Current single-family sales moved up 5 points to a reading of 13, and buyer traffic also jumped 5 points to a reading of 14.
But as welcome as such news is to builders, they shouldn’t start buying land and building a new subdivision of spec homes just yet. “In our opinion, while conditions are certainly showing signs of improvement, much of this is attributable to normal seasonal trends,” noted David I. Goldberg, a home building and building products analyst with UBS Investment Bank in New York. “In turn, we continue to expect that a trough in housing won’t materialize until supply growth slows and demand picks up further.”
Alison Rice is senior editor, online, at BUILDER magazine.