Emergency and Disaster Preparedness of U.S. Households

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Homebuilders Expect A Soft Winter Housing Market

Two months after posting their worst confidence reading of 2011, home builders say they foresee no improvement in the immediate- or medium-term market for new homes nationwide.

In August, for the second straight month, the Housing Market Index read 15.

The HMI is a monthly housing survey, published by the National Association of Homebuilders. It's scored on a scale of 1-100 with readings over 50 suggesting favorable home builder conditions. Readings under 50 suggest unfavorable conditions.

The Housing Market Index has been below the 50-point benchmark since 2006.

To calculate the HMI, home builders are asked 3 separate questions, each addressing the different element of the new home sales business.

1. How are today's market conditions for the sale of new homes?
2. How do you expect market conditions to be 6 months from now?
3. How are the current foot traffic of prospective buyers?

Based on the August answers to these questions, builders are witnessing an improvement with the current market, partially fueled by low mortgage rates, but expect momentum to fade into early-2012.

As a home buyer , this may bode well for you. If you can wait to buy a home, you may find builders more willing to concede on price or upgrades.

The other side of that conversation, though, is that while you may save money on the home, you may lose it in your monthly payments. Rising mortgage rates can quickly zap your savings -- adding tens of thousands in interest costs to your budget long-term.

For now, home prices remain low and mortgage rates do, too. Home affordability is at an all-time high. Take advantage of what the market gives you.

Led By Expectations Of A Strong Fall Season, Homebuilder Confidence Bounces Back

Homebuilder confidence is bouncing back.

One month after an unceremonious dip highlighted by poor sales figures and dim prospects for the future, the National Association of Homebuilder's Housing Market Index rebounded two points to 15 in July.

The monthly Housing Market Index is scored on a 1-100 scale. Readings above 50 indicate favorable conditions for homebuilders and the "new home" market. Readings below 50 indicate unfavorable conditions.

The Housing Market Index has not read higher than 50 in more than 5 years.

As a housing metric, the HMI is actually a composite of three separate surveys, self-reported by builders. The surveys ask about current single-family home sales volume; projected single-family home sales volume; and current buyer foot traffic levels.

In July, the responses read as follows : 

• Current single-family sales : 15 (+2 from June)
• Projected single-family sales : 22 (+7 from June)
• Buyer foot traffic : 12 (Unchanged from June)

The most noteworthy reading is the rapid rise in Projected single-family home sales. Although builders aren't experiencing more foot traffic, they think sales will spike between now and the New Year. 

That could spell bad news for home buyers.

When builders harbor higher expectations for the future, they're less willing to make concessions for upgrades and/or price. Your likelihood of getting "a great deal" as a buyer diminishes.

That's why it's good that mortgage rates are still so low. Low mortgage rates help with home affordability and can offset slight jumps in sale price.

Mortgage rates remain just above their lowest levels of 2011, and of all-time. 

Home Affordability Still Soaring; New Records Reached

Home affordability moved higher last quarter, buoyed by stable mortgage rates and falling home prices in California and nationwide. The National Association of Home Builders reports that Q1 2011 Home Opportunity Index reached an all-time high for the second straight quarter last quarter.

Nearly 3 of 4 homes sold between January-March 2011 were affordable to households earning the national median income of $64,400. It's the 9th straight quarter in which home affordability surpassed 70 percent, and the highest reading in more than 20 years of record-keeping.

From metropolitan area-to-metropolitan area, though, affordability varied.

In the Midwest, for example, affordability was high. 7 of the 10 most affordable markets were in the Midwest, including Kokomo, Indiana, in which 98.6% of homes were affordable to median income-earning families. Indianapolis, Indiana placed second for "big city" affordability.

The most affordable "big city" last quarter was Syracuse, New York. With a 94.5% affordability rate, Syracuse ranks 8th nationally in the Home Opportunity Index. It's the second time that Syracuse placed first in the last 4 quarters.

Meanwhile, on the opposite end of home affordability, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 12th consecutive quarter. Just 24.1 percent of homes were affordable to households earning the area median income, down more than 1 percent from the last reading.

Regardless of where you live, remember that rising mortgage rates can levy more pain on your household budget than can rising home values. And mortgage rates are expected to rise long before home prices do.

The rankings for all 225 metro areas are available for download on the NAHB website.

As Buyer Traffic Grows, Homebuilder Confidence Slips

Homebuilder confidence is falling -- a good sign for buyers of newly-built homes in and around the Beach Cities.

According to the National Association of Homebuilders, the Housing Market Index slipped one point to 16 in April. It's the 5th time in 6 months that the index read 16 -- a figure exactly in line with the 1-year average, but still considered "poor". The Housing Market Index reports on a scale of 1-100.

Values of 50 or better representing "favorable conditions". Values below 50 are considered "unfavorable".

It's been 5 years since the Housing Market Index read north of 50.

As an index, the HMI is actually a composite of three separate surveys, the results of which can be as telling as the final, compiled results. The surveys focus on specific aspects about a homebuilder's business, and use the broader responses to gauge overall market "sentiment".

The 3 questions are: 

1. How are market conditions for the sale of new homes today?
2. How are market conditions for the sale of new homes in 6 months?
3. How is prospective buyer foot traffic?

In April, interestingly, home builders felt market conditions were worse across the board, but still cited higher buyer foot traffic. This may be the result of a combination of rising mortgage rates and falling home values. Both tend to be bad for builders, and both tend to spur home buyers into action.

As a home buyer this spring, therefore, use the HMI data to your advantage. When home builders feel less confident on housing, buyers can often exact better concessions and/or upgrades during the negotiation process.

And, so long as mortgage rates continue to rise, that pressure on builders should build.

Homebuilders Expect More Sales Volume This Year

Homebuilders are optimistic about the housing market this spring, relative to recent months.

According to the monthly Housing Market Index as published by the National Association of Homebuilders, after 4 straight months of reading 16, March homebuilder confidence ticked 1 point higher to 17.

It's the highest confidence reading in 10 months.

A value of 50 or better indicates "favorable conditions" for home builders; with more builders viewing sales conditions as "good" than "poor".

HMI hasn't read higher than 50 since April 2006.

Regionally, the Housing Market Index showed mixed results. Confidence fell 1 point in the Northeast, held firm in the Midwest, and rose in the Southeast and West regions by 2 points and 4 points, respectively.

As an index, the monthly survey is actually a composite of three separate homebuilder surveys -- a report on single-family sales; a report on current buyer foot traffic; and a projection for single family sales in the next 6 months.

March's HMI breakdown shows that builders expect sales to be brisk over the next few months. Projected Single-Family Sales is running at its highest level since May 2010 -- right as the $8,000 federal homebuyer tax credit was ending.

• Single-Family Sales : 17 (Unchanged from February)
• Buyer Foot Traffic : 12 (Unchanged from January)
• Projected Single-Family Sales : 27 (+2 from February)

For home buyers , the March Housing Market Index may signal the end of "builder discounts" and free upgrades. As home sales increase, builders are often less likely to make concessions.

In conjuction with rising mortgage rates and new, mandatory loan costs, buying a newly-built home may never be as inexpensive as it is right now.

If you expect to buy a newly-built home this year, consider moving up your time frame. The longer you wait, the more it may cost you.

Home Affordability Peaked Last Quarter; Purchasing Power Sinks 10%

Home affordability reached an all-time high in 2010's last quarter. Unfortunately for home buyers in California , it's been a different story since, however.

As mortgage rates cratered, and with home values soft, the Home Opportunity Index reached its highest level in 20 years. The index is published by the National Association of Home Builders. 

Close to 74 percent of the new and existing homes sold between October-December 2010 were affordable to families earning the national median income of $64,400. It's the 8th straight quarter in which the Home Affordability Index surpassed 70 percent.

Prior to 2009, the HOI rarely topped 65 percent.

That said, though, as with everything in real estate, home affordability is a local event. For example, take the Elkhart/Goshen area of northern Indiana. 97 percent of homes sold there last quarter were affordable to families making the area's median income. 

This level of affordability is likely related to state capital Indianapolis, a perennial top-scorer itself.

For the second straight quarter -- and the 22nd time dating back to 2006 -- Indianapolis led all major metropolitan areas with a 93.5 affordability rating.

Meanwhile, on the opposite end of the home affordability spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 11th consecutive quarter. Just 25.5 percent of homes were affordable to households earning the area median income.

It's a a 6-point improvement from Q2 2010, however.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, it's important to remember that rising mortgage rates this year have made homes less affordable in all markets across the United States. We won't see a repeat record in this quarter's HOI once it's calculated and published.

Home buyers have lost 10% of their purchasing power since November, and mortgage rates look poised to rise even more.

If your plans call for buying a home later this year, consider moving up your time frame. The long-term costs of homeownership are rising, and affordability, therefore, is falling.

Home Builders Slowed By Economy, But Seeing More Foot Traffic

Homebuilder confidence held firm for the second straight month this month, according to the National Association of Home Builders.

The monthly Housing Market Index registered 16 out of a possible 100. January's reading is three points higher than the 2010 low-point, set in September, and in-line with last year's average reading.

According to the NAHB, the market for newly-built, single family homes remains relatively weak "following a below-expectations finish in 2010". Builders expect a better 2011.

The Housing Market Index dates to 1985. It's a composite of surveys which gauge the builders' perceptions of the new home-buying market.

There are 3 surveys and they ask:

1. How would you rate market conditions for sales of new homes today?
2. How would you rate market conditions for sales of new homes 6 months from now?
3. How would you rate the foot traffic of prospective buyers of new homes?

The answers are then collated and weighted, and used to produce the Housing Market Index.

In January, market conditions for current and future sales were deemed to be flat. Foot traffic is seen as increasing. For homebuyers of new homes , this data may foretell of more bidding wars in the months ahead.

More active buyers means more competition for homes. It may also mean fewer concessions from builders as confidence starts rising.

If you're in the market for a newly-built home, watching the Housing Market Index may be sensible. Each builder is different, of course, but as the overall market sentiment falls, buyers can be more likely to get "a deal". That's not the case once confidence is rising.

The HMI is plateaued. If it resumes rising later this year, expect new homes to get more costly.

Why Builder Confidence Surveys Matter To Buyers Of New Homes

Home builder confidence is holding firm this month, according to the National Association of Home Builders.

The group's monthly Housing Market Index survey posted 16 for December. That's the same value as from November. It's also equal to this 2010's average HMI reading.

HMI is scored on a scale of 1-100, and is a composite of 3 separate home builder surveys measuring single-family sales; projected single-family sales over the next six months; and prospective buyer foot traffic.

The results of the 3 surveys were as follows:

• Single-Family Sales : 16 (unchanged from November)
• Projected Single-Family Sales : 25 (unchanged from November)
• Prospective Buyer Foot Traffic : 11 (from 12 in November)

Values of 50 or better indicate favorable conditions for home builders. Values below 50 indicate unfavorable conditions.

In other words, although improving, conditions for home builders remain less from excellent. Home buyers can use this to their advantage. When builders feel pressure from the market, they're more likely to offer discounts.

On the other hand, job growth is returning, the economy is expanding, and mortgage rates are rising. These 3 factors are thought to boost housing markets. So, despite an unfavorable HMI reading, home builders might still less willing to "make a deal"; holding out for a better 2011.

November's strong Housing Starts data supports that line of thinking.

If you're buying a newly-built home in the the South Bay area , or expect to buy sometime in 2011, keep an eye on home builder sentiment surveys. The better the builders feel, the more you may be asked to pay to buy your next home.

Home Affordability Reaches Record-Levels... Last Quarter.

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in California and most U.S. markets.

According to the National Association of Home Builders' quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for home affordability, set in the first quarter of 2009.

The data also underscores that, when compared to historical norms, it's a fantastic time to be a home buyer.

Prior to 2009, the Home Opportunity Index rarely topped 65. The index has remained above 70 ever since.

All real estate is local, though, and on a city-by-city basis, home affordability varied last quarter.

For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area's median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack.

93% of homes in Indianapolis are affordable to families earning the area's median income. This ranks #9 nationwide.

On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010.

The rankings for all 225 metro areas are available online.

Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it's unlikely that the Home Opportunity Index will improve.

Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame.

Housing Starts Jump In September, Buoyed By Homebuilder Confidence

According to the Commerce Department, the number of single-family Housing Starts increased to 452,000 units in September, a 19,000 improvement over August.

A "housing start" is a new home on which construction has started.

Housing Starts data is surveyed and broken-down by housing type:

1. Single-Family Housing Starts
2. Multi-Unit Housing Starts (2-4 Units)
3. Apartment Building Housing Starts (5 or more units)

The government logs each type separately, but also lumps them into a single, comprehensive figure within its reports. For this reason, headlines surrounding the story seem contradictory.

For example:

• Marketwatch : Housing starts rise for 3rd straight month, up 0.3%
• CNN : Housing starts jump to 5-month high

It's single-family homes that most Americans purchase, though, and that's why single-family starts are the numbers worth watching. As 75% of the market, it's more relevant than the joint numbers most commonly reported by the press.

In September, single-family starts did move to a 5-month high but buyers and sellers should keep the figures in perspective. Just because starts are rising doesn't mean the housing sector has turned around for good.

The first reason why is because, in September, starts were 75 percent less as compared to 5 years ago at the peak of housing. And if you feel that's an unfair comparison, even as compared to the last 12 months, September's data was tens of thousands below average.

Second, September's Margin of Error happened to exceed its actual measurement. This means that the 4 percent in starts may actually turn out to be a loss of 4 percent (or more!) once the data is collected in full.

If there's a reason to think the New Homes market is coming back, though, it's that home builder confidence is also at a 5-month high. Foot traffic is rising and builders are optimistic about the next six months.  This could mean higher sales prices and less chance for negotiation.

Buyers in search of new homes may find it tougher to make a deal the closer we get to 2011.

As Buyer Foot Traffic Rises, So Does Homebuilder Confidence

As the "pulse of the single-family housing market", the Housing Market Index is a monthly product of the National Association of Homebuilders. Its scores range from 1-100, with a reading a 50 or better suggesting "favorable conditions" for builders.

Because of its methodology, the Housing Market Index can offer excellent insight into the market for newly-built homes. This is because its value is a composite of three survey questions:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the prospective traffic of new buyers for new homes?

Builder responses are collected, weighted, then presented as the Housing Market Index.

According to the NAHB, October's HMI reading of 16 is its highest value in 5 months. The uptick hints that the market for newly-built homes may rebound more quickly that this summer's weak new homes sales figures would otherwise suggest.

You'll remember that, between April and August, the number of new homes sold per month fell by 30 percent and the available, new home inventory climbed 2.3 months.

This month, though, builders report much better foot traffic and, as a result, have raised their expectations for the next six months of sales. Low mortgage rates are likely aiding the optimism, too.

As compared to 1 year ago, average, 30-year fixed mortgage rates are lower by 0.75 percent, a payment savings of $45 per $100,000 borrowed.

What's Ahead For Mortgage Rates This Week : October 18, 2010

Mortgage markets worsened last week in back-and-forth trading, pushing conforming mortgage rates higher on the week.

Despite the uptick, however, Freddie Mac reports that rates in California still managed to make new, all-time lows for the third week in a row. The benchmark 30-year fixed rate mortgage is now down 1.02% since April 2010.

The United States is experiencing a Refi Boom.

As compared to 6 months ago, a new, $200,000 home loan costs $124 less per month in principal + interest.

This week, monthly payments may fall some more. It all depends on data.

Early in the week, housing data takes center stage. The National Association of Home Builders releases its Housing Market Index this morning, and, Tuesday, the government prints September's Housing Starts figures.  Both reports figure to influence the bond market.

Strong readings should lead mortgage rates higher; weak ones should lead them lower. Economists expect weakness.

That said, the biggest story of the week -- and the one with the best chance of changing rates -- could stem from the Federal Reserve.

Federal Reserve officials, including Chairman Ben Bernanke, have observed the recent U.S. economy and have openly discussed the use of "non-conventional means" to spur it forward. As the rhetoric increases, it's widely believed that the Fed will act soon, and that the central bank's plan will include new commitments to U.S. Treasury debt, and, possibly, to mortgage-backed bonds.

Speculation of the Fed's next move has sparked mortgage bond demand which, in turn, has helped drive down mortgage rates. An official Fed announcement could push rates lower still.

For now, though, mortgage rates are as low as they've been in history. Rate shoppers have two choices. (1) Lock in a today's low rates, or (2) Wait and hope that rates fall further. Ultimately, rates may fall, but once they start rising, they'll likely rise quickly.

It's a gamble you may not wish to take.

As Homebuilder Confidence Stagnates, Deals Abound

Home builder confidence held firm this month, according to the National Association of Home Builders' monthly Housing Market Index. September's reading of 13 equaled a 17-month low.

The HMI is on a 1-100 scale. A value of 50 or better indicates "favorable conditions" for home builders.

Broken down, the Housing Market Index is actually a weighted composite of 3 separate surveys which measures current single-family sales; projected single-family sales; and foot traffic of prospective buyers.

None of the 3 September surveys improved from August:

• Single-Family Sales : 13 (unchanged from August)
• Projected Single-Family Sales : 18 (unchanged from August)
• Buyer Foot Traffic : 9 (from 10 in August)

Builder confidence is lower in 2010 than at any point in recorded history.

 

For home buyers , the drop in sentiment creates opportunity. With builders feeling "down", there's a greater likelihood for discounts and free upgrades. It can mean more house for your home buying money.

Plus, with the supply of both new and existing homes elevated, and foreclosures still hitting the market, conditions aren't soon likely to change.

Then, couple all that with all-time low mortgage rates and monthly housing payments look as affordable as ever.

If your plans call for buying a home in the early part of 2011, you may want to consider moving up your time frame. Today's market looks ripe for a good deal.

Home Affordability Rankings For 225 Metropolitan Statistical Areas

With home prices holding firm and mortgage rates still dropping, home affordability is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It's a slightly higher reading as compared to last quarter, and the second highest reading in the survey's history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area's median income, earning the New York city its first "Most Affordable Major City" designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the "Least Affordable Major City" title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the NAHB website but regardless of where you live, buying a home is as affordable as it's ever been in history. Furthermore, because home values are in recovery and mortgage rates may rise, the market is ripe for home buyers in the Beach Cities.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

Home Builder Confidence Falls Again; Home Buyers Gain Leverage?

Home builder confidence in the newly-built, single-family housing market is down for the third straight month this month.

After reaching a 3-year high just 90 days ago, the National Association of Homebuilders' Housing Market Index is now at a multi-year low. It's since dropped by almost half.

As an economic indicator, the HMI's goal is to "take the pulse of the single-family housing market". It surveys home builders across the country and asks them to report on 3 facets of their business:

1. How are market conditions today?
2. How do market conditions look 6 months from now?
3. How is the prospective traffic of new buyers for new homes?

Responses are then collated, weighted, and presented as the Housing Market Index.

The August HMI reading of 13 is the lowest since March 2009.

Not surprisingly, the main reasons why HMI is down echo the main reasons why consumer confidence is down. Jobs growth continues to be weak; credit guidelines remain restrictive; and, home values are recovering slowly, pressured by distressed properties.

Builders report watching foot traffic stagnate and most likely won't want to be stuck with excess inventory into the fall and winter months.  For home buyers in the South Bay , drops in builder confidence like this can be an excellent negotiation tool.

Builders may be more likely to offer incentives and/or price reductions into an uncertain economy, as compared to a strong one. Furthermore, weakness in home building indirectly drags mortgage rates lower. 

This one-two combination can make for cheaper homes with cheaper monthly payments.

Homebuilding forecast: Modest growth in 2010

Not a strong recovery, but a recovery nonetheless.  That's the homebuilding industry's prediction for 2010 - David

http://m.apnews.com/ap/db_8597/contentdetail.htm?contentguid=KHFUyQ6p

NAHB: Housing Starts & Permits Regain Some Ground in November

The National Ass'n of Home Builders says new building permits and homebuilding starts have begun to rise.   This signals that some builders (and their lenders) are ready to return to the market. - David

NAHB: Housing Starts Regain Some Ground in November