The nation’s home builders, Wednesday reported a considerable jump in sales, which could mean the future is bright for the housing market. The National Association of Home Builders/Wells Fargo Housing Market Index report has it that builder confidence in the newly built, single-family home market jumped 3 points to 66 in May. The is the first time the Housing Market Index gets this high since October of 2018. However, it is less than that of last May which stood at 70. Anything above 50 points is considered positive.
According to home builder and chairman of the NAHB Greg Ugalde, the current state of events in the market is a chance for the builders to recoup theirs loses after a wet winter and a home buying season with the least expectations.
“Despite the appreciation in confidence, affordability is still a problem that needs an immediate response. However, the figures from the HMI index implies that one should be optimistic as we progress into the year. ” Ugalde concluded.
The Housing Market Index is characterized by three components: The first, current sales conditions jumped 3 points to 72, buyer traffic rose 2 points to 49 – still in the negative zone, while sale expectations in the next six months rose 1 point to 72.
In the fourth-quarter of 2018, mortgage rates stood at 5 percent, making it difficult for potential buyers to come into the market. However, the rates are now just above 4 percent. The lowering figures coupled
with a strong job market and rising wages have contributed immensely to the considerable improvement in the housing market. In the same vein, builders will have to deal with the rising cost of labor, limited lot, and the huge cost of raw materials fueled by the ongoing global trade wars which have continued to harm affordability.
On a regional scale, moving on a three-month moving average, sentiments in the West rose 2 points to 71; in the Northeast rose 6 points to 57; moved 1 point in the South to 71 and in the Midwest, it appreciated 1 point to 54, all of which remained in the positive territory.