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.
The housing market index showed a nice bounce as current and expected new home sales led the index higher. For April 2015, the Housing Market Index came in at 56 as compared to 52 in March 2015. Any figure above 50 is considered positive and April represents the 10th consecutive month with the index above 50. The April figure came in at the high end of industry analyst expectations as continued low interest rates and improved weather drove increased home buying activity. The future home sales component of the index jumped to 64 from 59, showing home builder optimism for an increase in sales in the Spring home buying season. As a reflection of current positive market conditions, the present home sales component of the index increased to 61 from 58. The home buyer traffic component of the index continues to lag the home sales components but bounced back from a multi-month low of 37 in March to 41 in April. The strong April housing market index report along with recent positive reports on new home sales, pending home sales and mortgage applications show the housing and mortgage markets may finally be building sustainable momentum. (Source: Bloomberg)
What it Means for Mortgage Borrowers
The uptick in the housing market index and other real estate market indicators is positive for mortgage borrowers because it demonstrates that lenders are providing financing to qualified buyers. As reflected in the disappointing traffic component of the housing market, interest from first-time home buyers continues to be a weak spot. Even a modest increase in activity from first-time home buyers could have a tremendously positive impact on the real estate and mortgage markets. If you are a prospective first-time home buyer sitting on the sideline, check out our First-Time Home Buyer Mortgage Cheat Sheet to get up to speed on the mortgage process. Additionally, interest rates remain at attractive levels and you can use the INTEREST RATES function on FREEandCLEAR to monitor rates and fees for lenders in your area.
The FREEandCLEAR Mortgage Expert