The National Association of Home Builders (NAHB) and Wells Fargo reported that the Housing Market Index (HMI) rose from 19 to 21 between November and December. This was the third consecutive monthly gain and the highest level since May 2010.
Gains were broad-based, with current single-family sales up from 20 to 22. Expectations for future sales were also higher. Regionally, the South experienced the fastest growth, with the Northeast edging slightly lower.
NAHB Chief Economist David Crowe said:
“While large inventories of foreclosed properties continue to plague the most distressed markets and consumer worries about job security and the challenges of selling an existing home remain significant factors, builders are reporting more inquiries and more interest among potential buyers than they have seen in previous months.” He noted that this was a very positive trend.
Nonetheless, while these numbers are indeed positive, they continue to reflect a market that remains severely weakened from previous years. The HMI averaged 67 in 2005, for instance. Manufacturers anxiously await a healthier housing market – one of the key headwinds to getting our domestic economy back on track.
Tomorrow, the Census Bureau releases new housing starts data, which will hopefully also move higher. The consensus is that new residential construction will grow to 635,000 units in November, up from 628,000 in October.
Chad Moutray is chief economist, National Association of Manufacturers.