The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which measures homebuilder confidence for newly built, single-family homes, improved in December, according to the NAHB.
The HMI is compiled from results of a NAHB monthly survey that has builders rank current single-family sales, and those projected for the forthcoming six months, as either “poor,” “fair” or “good.” Builders are also asked to rate traffic of prospective buyers as “low to very low,” “average” or “high to very high.” Survey answers are then collected and given a numeric value — an index value above 50 for the various categories means that builders viewed conditions more on the positive end of the spectrum rather than on the negative end.
The December survey results show that, on average, the HMI rose by four points. All three index categories posted gains in December: The index for current sales conditions improved six points to 64, the future sales index rose by two points to 62 and the index for traffic of prospective buyers rose three points to 44.
While the overall index might be positive, recent results vary by region. Three-month moving averages for regional HMI scores show that the South moved one point higher to 57, while the Northeast, Midwest and West regions each dropped one point to 38, 59 and 59, respectively.
The results of the index give experts hope that the housing market will continue to grow moving into 2014.
“The recent spike in mortgage interest rates has not deterred consumers, as rates are still near historically low levels,” said NAHB Chief Economist David Crowe. “Following a two-month pause in the index, this uptick is due in part to release of the pent-up demand caused by the uncertainty generated by the October government shutdown. We continue to look for a gradual improvement in the housing recovery in the year ahead.”
“This is definitely an encouraging sign as we move into 2014,” said NAHB Chairman Rick Judson. “The HMI is up 11 points since December 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view on where the industry is going.”