Good sign for housing market...

Builders' confidence rises in August

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Group reports more prospective buyers for new homes
Monday, August 16, 2004

Inman News

Bobby Rayburn, National Association of Home Builders

Builders' confidence in the new single-family housing market remains high, and has improved from July to August, the National Association of Home Builders and Wells Fargo reported today. This Housing Market Index is derived from a survey of builders that asks about current single-family home sales, single-family home sales over the next six months, and traffic of prospective buyers.

A rating above 50 in each category indicates that conditions are good, while a rating below 50 indicates that conditions are poor. The overall August rating was 71, compared to the revised July number of 67. The index reached 72 in October 2003.

"Long-term mortgage rates fell to 6.05 percent in July, from 6.29 percent the previous month, then continued to fall in the beginning of August. This undoubtedly helped push builder optimism to its highest level since October of 2003 as potential buyers who might have been sitting it out started diving back into the market when rates headed downward," said Bobby Rayburn, association president and a home and apartment builder from Jackson, Miss. "With the ongoing favorable financing climate and solid house-price performance, we have good reason to expect continued strength in the housing market in the months ahead."

The index for current single-family home sales jumped two points to 76, the highest level since April of this year, while the index of predicted sales for the next six months rose four points to 78 – the highest level since the 81 rating reached in November 2003. The biggest gain was in builders' rating of traffic of prospective buyers -- this gauge rose six points to 57, which was three points away from the record-high rating of 60 that was recorded in May 1999.

The rating of traffic by prospective buyers reached a two-year low of 35 in March and April of 2003, while the rating of future sales hit a two-year low in March 2003, and the rating of current new-home sales reached a two-year low in April 2003.

The association has conducted the surveys for about 20 years.

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