U.S. builder confidence in the market for new single-family homes edged downward in June, but remained well above where it was this time last year when mortgage interest rates were at their lowest point in nearly half a century, according to the National Association of Home Builders' latest Housing Market Index (HMI). The HMI declined a marginal 2 points to 67 in June, which is 5 points ahead of its 62 reading in June 2003.
"All the ingredients are in place for a healthy housing outlook," said NAHB President Bobby Rayburn, a home and apartment builder from Jackson, MS, U.S. "Builders are reporting strong demand for new homes in markets across the country."
NAHB Chief Economist David Seiders added: "Long-term mortgage rates have held firm near a favorable 6.3 percent over the last 5 weeks, while the job market and overall economy have been improving. Add to this the impressive house-price performance and solid demographics we're seeing in terms of new household formations, and the fundamentals all point to 2004 being another outstanding year for home builders."
The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 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 over 50 indicates that more builders view sales conditions as good than poor.
The HMI component index gauging current sales of new single-family homes barely budged in June, scoring a 1-point decline to a very healthy 73. Meanwhile, the index gauging sales expectations in the next 6 months dropped two points to 73, and the index gauging traffic of prospective buyers fell 3 points but remained well above its year-ago level.
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