Demand for newly built single-family homes in the U.S. is holding steady at a healthy level in March, according to builders surveyed for the National Association of Home Builders' (NAHB) latest Housing Market Index (HMI). The HMI remained unchanged from February's 64 reading this month.
"The tremendous pace of home sales in last year's final months has apparently given way to a more sustainable level of activity in early 2004," said Bobby Rayburn, NAHB president and a home and apartment builder from Jackson, MS, U.S. "This climate of stability is a positive sign heading into the spring home buying season," he added.
Favorable financing conditions, solid house-price performance, and excellent demographics continue to drive the new-homes marketplace, added NAHB Chief Economist David Seiders. "Builders evidently are deriving confidence from these developments and registering realistic expectations for the future," he said, noting that "a gradual downward drift has occurred in the HMI from its highs of late 2003, in tandem with ongoing concerns about the job market and lower consumer confidence readings."
The HMI is derived from a monthly survey of builders that NAHB has been conducting for the last 19 years. Home builders are asked to rate current sales of single-family homes as "good," "fair," or "poor." They are also asked to rate traffic of prospective buyers as "high to very high," "average," or "low to very low." Scores for responses to each component are used to calculate a seasonally adjusted index, where any number more than 50 indicates that more builders view sales conditions as good than poor.
Two out of three of the HMI's component indexes slipped in March. The index gauging current sales of new single-family homes fell two points to 69, while the index gauging sales expectations for the next 6 months declined three points to 70. Meanwhile, the index gauging traffic of prospective buyers rose two points to 48, indicating some slight improvement in the flow of visitors to model homes over the last month.
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