Builders' prospects wane

August 19, 2002

NAHB's housing market index dips after record-breaking home sales this summer

Inman News Features

Home builders are toning down their expectations after record-breaking sales this summer to reflect a lower, but still strong level of activity in the market for new single-family homes, according to the National Association of Home Builders' housing market index.

The August housing market index dipped four points to 57, its lowest level since year-end 2001, after holding within one point of 60 for the last five months.

All of the component indexes saw decreases in August. The index gauging current sales fell four points to 61, while the index for traffic of prospective buyers fell five points to 43, while the index gauging sales expectations for the next six months slid just two points to 67.

"This is something of an expected 'reality check' following the exceptionally strong activity of early summer," said NAHB President Gary Garczynski. "Builders remain justifiably confident in a market in which buyer demand is being bolstered by historically low interest rates on home mortgages. They simply view overall conditions as healthy and stable rather than extraordinary."

The index is derived from a monthly survey of builders that are asked to rate current sales of single-family homes and sales expectations for the next six months as "good," "fair" or "poor." They are also asked to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for responses to each component are used to arrive at a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

NAHB continues to forecast that sales of new homes this year will surpass last year's record 908,000 units.

Copyright: Inman News Service

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