Builder confidence in the new-homes marketplace remained unchanged in December from November's revised reading of 70 on the National Association of Home Builders' (NAHB) monthly Housing Market Index (HMI), released yesterday. "Looking forward, builders remain quite optimistic but are expressing some concern about the possibility of higher interest rates as the economic expansion continues," said NAHB Chief Economist David Seiders. NAHB is projecting that rates on long-term mortgages will rise gradually in 2004, approaching 6.5 percent by mid-year.
The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Homebuilders are asked to rate current sales of single-family homes and sales expectations for the next six months as "good," "fair," or "poor," where any number over 50 indicates that more builders view sales conditions as good than poor.
The index gauging current sales activity fell one point to 77 in December from a revised 78 points in November, the index gauging traffic of prospective buyers rose four points to 51 , and the index gauging expected sales in the next six months declined five points to 76, according to the report.