In January 2009, according to the National Association of Home Builders/Wells Fargo index of builder confidence, U.S. homebuilder confidence was at a record low of 8; last month the index was at 9. The most recent study released today showed a month-over-month increase of 5, leaving the overall current index reading at 14. This represents the largest month-over-month increase in builder confidence since May 2003, and clearly shows that home builder confidence in a housing recovery is rising.
The National Association of Home Builders/Wells Fargo index of builder confidence asks builders to gauge current sales, buyer traffic and forecast the outlook for the next six months. A reading on the index below 50 means that most of the home builder participants view industry conditions as poor. The current reading at 14 is very low, but an increase of 6 from the beginning of the year illustrates a significant increase.
The increase in builder confidence indicates that builders participating in the index are experiencing more traffic and more sales, and that they expect things to get better over the next six months. Here is a breakdown of the increases in each category:
- Current single-family home sales rose from 8 to 13
- Current buyer traffic rose from 9 to 14
- Sales expectations increased significantly from 15 (record low) to 25
The index increases in single-family home sales and buyer traffic show that low interest rates, falling home prices and state and federal government efforts are starting to stir more interest in new homes. The large increase in sales expectations demonstrates that builder’s think these things will continue to help recovery in the future.
The index is likely the best estimation we have of what the housing situation today looks like, builders measure sales and traffic on a daily basis, and if they think things are getting better, that’s good news, right? Hopefully, this upward trend continues and 2009 sees an index reading of over 50.
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We’re seeing more buyers respond to the low prices, low rates, and incentives. Many have said that they are waiting for the bottom, and feel that now is the time to act.
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Whoa, I can see in the image their dramatically decreasing.. I hope that sign of increasing sales will go up again and keep the housing market still on track…
-david
Our area has also seeing an increase in new home sales after two years of stagnant sales. Let’s hope this is the beginning of the end.
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Buyers may also benefit from inflation as government spending is out of control.
Orlando still has some activity especialy in moderate priced homes.