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 (NAHB)/Wells Fargo Housing Market Index (HMI), released Sept. 16. The HMI gained two points to 18, rising from its record low of the previous two months.
“Builders have several reasons to be more optimistic at this time,” said NAHB President Sandy Dunn, a homebuilder from Point Pleasant, WV. “Many are sensing that home sales are nearing a turning point with the support of the newly enacted first-time home buyer tax credit. Meanwhile, with the government’s explicit backing of Fannie Mae and Freddie Mac now assured, this should help keep mortgage rates at very favorable levels going forward.”
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% 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% 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.”
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