Builder confidence in the market for newly built, single-family homes rose 5 points in April to the highest level since October 2008, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released on April 15. This gain was the largest one-month increase recorded since May of 2003, and brings the HMI out of single-digit territory for the first time in six months -- to 14. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months.
"If you're a potential buyer who's been sitting on the fence waiting for a sign that now is the time to act, this is it," said NAHB Chairman Joe Robson, a home builder from Tulsa, OK. "Some of the most favorable buying conditions in a lifetime are now in place, and they are drawing more consumers back to the market."
"This is a very encouraging sign that we are at or near the bottom of the current housing depression," said NAHB Chief Economist David Crowe. "With the prime home buying season now underway, builders report that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates and the introduction of the $8,000 first-time home buyer tax credit." Crowe cautioned, however, that a key issue that still must be addressed is the ongoing lockdown on builder acquisition, development and construction (AD&C) financing. "Restoring health to our nation's economy will require a substantial housing recovery, and that recovery is contingent on breaking the logjam in AD&C lending that presents an ever-increasing obstacle for home builders," he said.
Each of the HMI's component indexes recorded substantial gains in April. The largest of these gains was a 10-point surge in the component gauging builder sales expectations for the next six months, which brought that index to 25. The component gauging current sales conditions and the component gauging traffic of prospective buyers each rose 5 points, to 13 and 14, respectively.
The HMI also rose in every region in April, with an 8-point gain to 16 in the Northeast, a 6-point gain to 14 in the Midwest, a five-point gain to 17 in the South and a 4-point gain to 9 in the West.