Housing Market Index Falls Back but Remains Positive
The National Association of Home Builders Housing Market Index is one of the key housing market statistics that we track at FREEandCLEAR. The Housing Market Index incorporates factors such as current and expected new home sales and interest level from potential new home buyers. It is important to highlight that the index focuses on new home sales, so homes built by builders that have never been lived in before, as opposed to existing home sales, which represents a larger portion of the overall housing market.
For February 2015, the Housing Market Index came in at 55 as compared to 55 in January 2015. Any figure above 50 is considered strong and February represents the 8th consecutive month with the index above 50. The January figure came in slightly below industry analyst expectations. The present new home sales and future home sales components of the index remained relatively flat at 61 and 60 respectively. The third component of the index, home buyer traffic, came in at a disappointing 39, down from 44 in January and continuing a negative trend line for the past six months. Although the February figure was positive, the lack of home buyer traffic is a concerning indicator for future new home sales and reflects the long-term under-participation of first-time home buyers in the home purchase market. (Source: Bloomberg)
What it Means for Mortgage Borrowers
Based on the first two months of the year, home builders are optimistic about the new home sales market in 2015 and beyond. Low interest rates and softening borrowing requirements should be positive drivers for the new home sales market. For both new and existing home sales to really take off, however, first-time home buyers, and especially younger buyers, will have to enter the market in numbers. Down payment and lending requirements as well as uncertainty about the real estate market and broader economy continue to keep first-time buyers on the sidelines. Prospective home buyers should review relaxed lending requirements and learn about low or no down payment mortgage programs on FREEandCLEAR. Additionally, check out our Mortgage Expert Insights section which offers money and time-saving tips to home buyers of all experience levels.
The FREEandCLEAR Mortgage Expert
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