The National Association of Home Builders (NAHB)/Wells Fargo Housing Market
Index (HMI) held steady in March, consolidating five straight months of gains for
this measure of how home builders view the health of their industry. The index is at 28, the highest level since
The HMI is derived from a survey
conducted among NAHB members each month.
Home builders are asked for their perceptions of the current market for
new homes, rating the market as “good,” “fair,” or “poor,” and asked to rate
their expectations over the next six months on the same scale. NAHB also asks them to assess the traffic of
prospective buyers as “high to very high,” “average,” or “low to very low.” The three measures are reported individually
and aggregated into the HMI. Any number
over 50 indicates that more builders view conditions as good than as poor.
The component gauging current sales
conditions was down one point from February to 29, the component gauging
traffic of prospective buyers was unchanged at 22, but expectations for the
next six months increased two points to 36.
On a regional basis the HMI was at 25 in
the Northeast, five points higher than in February. It gained two points in both the Midwest and
South to 32 and 27 respectively but, after jumping 22 points in February the
Western region score fell 10 points in March.
“Builder confidence is now twice as
strong as it was six months ago, and the West was the only region to experience
a decline this month following an unusual spike in February,” observed
NAHB Chief Economist David Crowe. “That said, many of our members continue
to cite obstacles on the road to recovery, including persistently tight builder
and buyer credit and the ongoing inventory of distressed properties in some
Builders involved in remodeling got a little good news on Monday as well. BuildFax reported that building permits for
remodeling rose in January to a seasonally-adjusted annual rate of
2,998,000. This was an increase of 13
percent over the December number of 2,653,000, and 11 percent higher than in
Estimates of permits rose in three of
the regions. Only in the Northeast was the number down, declining 7 percent to
430,000 which was still 12 percent higher than one year earlier. Remodeling in the South rose 17 percent from
December and 6 percent from a year earlier to 1,122,000 permits and the Midwest
increased 9 percent and 14 percent respectively to 595,000. Permitting in the West rose 10 percent month-over-month
and 14 percent from January 2011 to 595,000.
“Residential remodeling this winter is as
strong as it has been in more than five years. We expect residential
remodeling to continue to grow throughout 2012,” said Joe Emison, Vice
President of Research and Development at BuildFax.