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 October 2014, the Housing Market Index declined to 54 as compared to 59 in September 2014. The weaker-than-expected October figure reflected decreases in the three components that comprise the index — home buyer traffic, new home sales and future sales. The October figure is disappointing in comparison to the positive September Housing Market Index figure which was boosted by increases in all three index components, including especially strong home buyer traffic. In short, the index suggests that demand for newly constructed houses, especially from first-time home buyers, remains inconsistent and relatively fragile, despite the recent decline in interest rates. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The decline in Housing Market Index may make builders more aggressive as they seek to sell newly constructed homes. Home buyers could benefit from increased financial incentives or potential price reductions, although this is less likely. Additionally, lower interest rates may also bring first-time home buyers into the marketplace, although the recent pullback in rates did not appear to have an immediate impact on the new home sales or buyer traffic. Potential home buyers looking to take advantage of favorable market conditions can use the FREEandCLEAR Mortgage Qualification Calculator to determine what size mortgage they can afford and the COMPARE LENDERS feature on FREEandCLEAR to keep track of interest rates.
The FREEandCLEAR Mortgage Expert