WASHINGTON -- Builder confidence in the market for newly built single-family homes rose for the first time in seven months this September, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released last week. The HMI gained two points to 18, rising from its record low of the previous two months.
Following the Treasury Department's announcement that it was placing mortgage giants Fannie Mae and Freddie Mac into conservatorship last week, the average rate on 30-year fixed-rate conforming home mortgages declined by nearly half a percentage point, falling to below 6 percent for the first time in several months. Market responses to the Lehman Brothers bankruptcy filing and the purchase of Merrill Lynch by Bank of America have put additional downward pressure on prime conforming mortgage rates.
"Nearly half of the builders in our September survey indicated that they expect to see a positive impact from the tax credit in their market areas," said NAHB Chief Economist David Seiders. "Of those respondents, 20 percent said their market has already experienced some of this effect. Meanwhile, consumer confidence has risen and more households are saying that now is a good time to buy a home. All of these factors, along with the recent downward movements in mortgage rates, suggest that new-home sales will be stabilizing in the final quarter of the year."
All three of the HMI's component indexes registered gains in September. The indexes gauging current sales conditions and traffic of prospective buyers were each up a single point, to 17 and 14, respectively. Meanwhile, the index gauging sales expectations for the next six months rose by six points, to 30 - which was four points higher than its year-ago level.
All regions also posted some degree of improvement in the September HMI, with the Midwest, South and West each up two points, to 15, 22 and 12, respectively, and the Northeast posting a six-point gain to 22.
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