Builder confidence in the market for new single-family homes rose five points to 69 in April rose, according to the National Association of Home Builders' latest Housing Market Index (HMI). "Favorable interest rates and strong home-price appreciation are still driving demand in today's housing market, despite the recent bump-up in mortgage rates," said NAHB President Bobby Rayburn. "Builders actually saw quite a few buyers hurrying to lock in financing as mortgage rates firmed up."
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 expected sales in 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.
"We expect the demand for single-family homes to remain quite strong in coming months, despite the rise in long-term mortgage rates, as growth in employment and household income accelerates," said NAHB Chief Economist David Seiders. "Indeed, the economic and demographic foundations for housing are very solid, supporting both home sales and house prices. Theories of house price 'bubbles' are bound to be discredited in the process."
Two out of three of the HMI's component indexes rose strongly in April. The index gauging current sales of new single-family homes and the index gauging sales expectations for the next six months each rose six points to 76, according to the report. Traffic of prospective buyers fell one point in April to 48 compared to the previous month.