Builder Confidence Slips Two Notches in June
Builder confidence in the market for new single-family homes edged downward in June but remained well above where it was this time last year when mortgage interest rates were at their lowest point in nearly half a century, according to Washington, D.C.-based National Association of Home Builders’ latest Housing Market Index (HMI). The HMI declined a marginal two points to 67 in June, which is five points ahead of its 62 reading in June of 2003.
“All the ingredients are in place for a healthy housing outlook,” said NAHB president Bobby Rayburn, a home and apartment builder from Jackson, Miss. “Builders are reporting strong demand for new homes in markets across the country.”
“Long-term mortgage rates have held firm near a favorable 6.3 percent over the last five weeks, while the job market and overall economy have been improving,” noted NAHB chief economist David Seiders. “Add to this the impressive house-price performance and solid demographics we’re seeing in terms of new household formations, and the fundamentals all point to 2004 being another outstanding year for home builders.”
The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes as “good,” “fair” or “poor.” They are also asked to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for responses to each component are used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.
Increased Plywood Demand is Increasing Construction
According to an article in Las Vegas’ Review-Journal, the increased cost of plywood and plywood-like materials are “having an effect on already sharply escalating home prices in Southern Nevada.”
The article attributed the problem to there not being enough mills nationwide to produce enough material for residential home construction.
“That failure to meet the high demand means the average price for 1/2-inch, four-ply fir plywood is nearly $28 a sheet—double the price from last year. Also, a 3/4-inch sheet of plywood that sold for $12.49 in March 2003 costs $28.99 today, the Framing Contractors Association of Las Vegas,” reported in the article.
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