Home Builders Report Higher Sales Levels In January

Posted: February 16, 2011 in Homebuilders
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NAHB HMI Index 2000-2011

Homebuilder confidence in the market for newly-built, single family homes appears stable as the spring buying season gets underway in Scottsdale.

The confidence reading is recorded and reported monthly by the National Association of Homebuilders. For the 4th straight month, the group’s Housing Market Index reads 16.

As a market indicator, Housing Market Index has been tracked for more than twenty years and reports on a 1-100 scale. A value of 50 or better indicates “favorable conditions” for home builders.

HMI hasn’t read higher than 50 since April 2006.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys measuring current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

February’s surveys showed slight improvement as compared to January, overall.

  • Single-Family Sales : 17 (+2 from from January)
  • Projected Single-Family Sales : 25 (+1 from January)
  • Buyer Foot Traffic : 12 (unchanged from January)

It’s notable that the current sales levels were higher in February, and that projected sales levels for the next 6 months are higher, too.

For home buyers Arizona across , this month’s Housing Market Index reading may foreshadow tougher negotiations in the months ahead with builders. The likelihood of getting discounts and free upgrades may be diminished as builders see their respective sales levels grow, and as the economy expands.

Coupled with rising mortgage rates, home buyer purchasing power may never be as high as it is today. 

Therefore, if your plans call for buying a newly-built home this year, think about moving up your time frame. Builder confidence appears to have bottomed. As it rises, so should home prices.

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