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Homebuilders Confident, But Housing Starts Reach Record Low
Home-buying conditions are great, builders say, despite drop in starts and permits.
Houses are the most affordable they've been in 18 years, and builders are increasingly confident thanks to low prices, interest rates and the $8,000 tax credit for first-time homebuyers, according to the NAHB.
Builder confidence improved in May to its highest level since September 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), up 2 points to 16.
"Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime," says NAHB chairman Joe Robson.
"You're not likely to get a better deal in terms of mortgage rates than what's available right now. Combine that with the affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers that are now available, and you have a very appealing set of reasons to make a move."
The NAHB/Wells Fargo Housing Opportunity Index (HOI), released this week, shows that housing affordability jumped 10 percentage points in Q1 2009. This means that 72.5 percent of the new and existing homes sold in Q1 were affordable to families earning the national median income of $64,000.
"Underlying the increase in affordability are lower home prices and record low interest rates. Combined with the $8,000 federal tax credit for first-time home buyers, consumers are beginning to return to the marketplace," says Robson.
Even though there seems to be plenty of good news on the housing front, the number of new starts dropped 12.8 percent in April to a seasonally adjusted annual rate of 458,000.
That's the lowest number since the government started keeping track of housing starts in 1959, according to CNN.
Building permits also dropped to a record low 494,000 in April, falling 3.3 percent.
But new construction of single-family homes actually rose 2.8 percent in April, hitting 368,000. Multi-family homes dropped a massive 42 percent in April, reaching 78,000 (from 135,000 in March).
It's obviously difficult to know when you've hit a bottom without more data, but the NAHB has a rosy outlook for the future.
"The fact that the May HMI continued to tick up from April's five-point increase provides confirming evidence that the improved confidence level was no fluke," says David Crowe, NAHB Chief Economist.
"This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."
Builder confidence improved in May to its highest level since September 2008, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), up 2 points to 16.
"Builders are responding to what they perceive to be some of the best home buying conditions of a lifetime," says NAHB chairman Joe Robson.
"You're not likely to get a better deal in terms of mortgage rates than what's available right now. Combine that with the affordable prices, multitude of home choices and $8,000 tax credit for first-time buyers that are now available, and you have a very appealing set of reasons to make a move."
The NAHB/Wells Fargo Housing Opportunity Index (HOI), released this week, shows that housing affordability jumped 10 percentage points in Q1 2009. This means that 72.5 percent of the new and existing homes sold in Q1 were affordable to families earning the national median income of $64,000.
"Underlying the increase in affordability are lower home prices and record low interest rates. Combined with the $8,000 federal tax credit for first-time home buyers, consumers are beginning to return to the marketplace," says Robson.
Despite Affordability and Confidence, Housing Starts Down
Even though there seems to be plenty of good news on the housing front, the number of new starts dropped 12.8 percent in April to a seasonally adjusted annual rate of 458,000.
That's the lowest number since the government started keeping track of housing starts in 1959, according to CNN.
Building permits also dropped to a record low 494,000 in April, falling 3.3 percent.
But new construction of single-family homes actually rose 2.8 percent in April, hitting 368,000. Multi-family homes dropped a massive 42 percent in April, reaching 78,000 (from 135,000 in March).
Did We Reach a Bottom?
It's obviously difficult to know when you've hit a bottom without more data, but the NAHB has a rosy outlook for the future.
"The fact that the May HMI continued to tick up from April's five-point increase provides confirming evidence that the improved confidence level was no fluke," says David Crowe, NAHB Chief Economist.
"This continued increase indicates that home builders feel we're at or near the bottom of the market and that positive signs lie ahead for builders and potential home buyers, provided that builder access to production credit significantly improves."
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