After having endured a long stretch of dismal news, home builders are now feeling more optimistic about the state of the real estate market. The National Association of Home Builders, or NAHB, and Wells Fargo together periodically compile an industry survey called The Housing Market Index. It's based on how builders feel about single-family home sales, their outlook for sales six months out and the number of prospective buyers.
Looking at the latest index in April from purely numbers point of view, it jumped over 50%, climbing to 14 from a meager 9, the old mark. When the survey was started in 1985, the baseline was set at 50. From then on it has generally fluctuated between 20 and 70. When the current mortgage and housing market meltdown came roaring it, it sunk mercilessly to single digits and is now trying to get out of there.
The increase is substantial and welcome news. To many in the industry it signals that a housing market bottom may have been reached, or at least is imminent. That may be a bit premature, though.
The poor employment picture continues to keep many would-be home buyers on the sidelines. Mortgage funding is widely available, but qualification requirements are still strict, dampening the hopes of scores of borrowers. Existing homes, like in Las Vegas most of them bank REOs, are often priced much lower, leaving similar-sized new homes at a distinct disadvantage.
It could be that the upbeat index is a reflection of participants predicting the historically strong spring and summer buying season will this time bring along better sales figures. They also could be counting on Washington stimulus efforts slowly starting to bear fruit. Time will tell.