Builders’ belief in the market for newly built, single-family homes improved in April as consumers took advantage of home-buyer tax credits set to expire at the end of the month.
The National Association of Home Builders/Wells Fargo Housing Market Index surged four points to 19 in April, its highest level since September 2009.
“Home builders reported some real improvement in current sales activity and traffic of prospective buyers through their model homes over the past month,” said NAHB Chairman Bob Jones, a builder from Bloomfield Hills, Mich. “While we remain cautious about what future months will bring, it’s great to have this positive momentum at the start of the spring home buying season.”
NAHB Chief Economist David Crow said that the rise in builder confidence was expected for April, but the next several months are more of a mystery.
“An expected surge in buyer activity leading up to the expiration of the home buyer tax credits and a gradually improving economy helped to brighten builders’ view of the marketplace in April,” he said. “Meanwhile, builders have a more neutral view of what may come in the next six months, and are very aware of the many factors that continue to drag on housing at this time, including the critical shortage of credit for new and existing projects, problems with inaccurate appraisals, and the ongoing flow of foreclosed properties on the market.”
Derived from a monthly survey that NAHB has been conducting for more than 20 years, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.