Homebuilder Confidence Survey Leaves Hints For Homebuyers

By mark-slade January 19, 2011

Homebuilder Confidence Survey Leaves Hints For Homebuyers

NAHB Housing Market Index 2000-2011
Buying new construction? Keep an eye on the indicators. The best “deal” is to buy while the market is soft.

Homebuilder Confidence Edging Higher

Homebuilder confidence held firm for the second straight month this month, according to the National Association of Home Builders. The monthly Housing Market Index registered 16 out of a possible 100.
This month’s reading is three points higher than 2010’s low-point, set in September, but still a tad worse than expected. According to the NAHB, the market for today’s newly-built, single family homes remains relatively weak because of a “below-expectations finish in 2010”.
As compared to 2009, though, market momentum stays positive. Home builders in Ohio, Virginia and everywhere else expect an improved 2011.
Along with the rest of world.

Homebuyer Hints Hidden In The Housing Market Index

The NAHB’s Housing Market Index dates to 1985. It’s not one survey, though, but rather a composite of surveys which gauge builder perceptions of the new home-buying market.
The Housing Market Index lumps 3 surveys which ask:

  1. How would you rate market conditions for sales of new homes today?
  2. How would you rate market conditions for sales of new homes 6 months from now?
  3. How would you rate the foot traffic of prospective buyers of new homes?

The answers are then collated and weighted on a formula, then used to produce the Housing Market Index.
In January, market conditions for current and future sales were deemed to be flat. Foot traffic is seen as increasing, however. For new construction homebuyers in places like Gladwyne, Pennsylvania, increased foot traffic foretells potential bidding wars in the months ahead.
There will be more competition for new construction homes. There may also be fewer concessions from builders as confidence continues rising.

Your New Construction Strategy For 2011

If you’re in the market for a newly-built home, put the Housing Market Index on your “economic watchlist”. Each builder reacts to news differently, of course, but as the general sentiment of the market rises, buyers will find great deals going scarce.
Builders won’t short-change their profits.
If you’re buying new construction and want to know your mortgage options — for jumbo mortgages or otherwise — call or click here to send me an email. I answer all my own emails and can share with you your options. Because it’s not just home prices that will rise, but mortgage rates, too.