The National Association of Home Builders' monthly Housing Market Index increased this month signaling that home builders are starting to have more confidence is a strengthening housing market.
"Builders surveyed for the HMI at the beginning of May were undoubtedly reacting to the heightened consumer interest they had just witnessed as the deadline for home buyer tax credits arrived at the end of April," said Bob Jones, Chairman of the National Association of Home Builders and a home builder from Bloomfield Hills, Mich. "Builders are also hopeful that the solid momentum that the tax credits initiated will continue even now that those incentives are gone."
"The really encouraging part of today's HMI is that sales expectations for the next six months continued to gain, despite the expiration of the home buyer tax credits at the end of April," said NAHB Chief Economist David Crowe. "This means builders are more comfortable that the market is truly beginning to recover, and that positive factors for buying a new home-low interest rates, great selection, stabilizing prices, and a recovering job market-are taking the place of tax incentives to generate buyer demand."
Crowe was quick to point out, however, that while builder confidence has improved from the depths of the housing downturn, it is still quite low by historic standards. "Obviously we still have a long way to go, and it's worth repeating that continued challenges such as the critical lack of project financing, inappropriate appraisal procedures, competition from short sales and foreclosures, and the soaring costs of some building materials are major obstacles on the path to a healthier housing market and economy," he said.