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Home Builders Cautious About Market

Home builders are a good gauge of where the housing market is headed. After all, their business depends on being able to tell when and where home buyers are looking to buy. So their perspective on the market for new homes is considered a good indicator of housing health. The National Association of Home Builders measures how confident builders are feeling with their monthly Housing Market Index. The index is based on a survey which scores builders' responses on a scale where any number above 50 indicates more of them say conditions are good than poor. In June, the index scored a 67, down two points from May. Jerry Konter, NAHB's chairman, says builders are feeling more cautious these days. “Six consecutive monthly declines for the HMI is a clear sign of a slowing housing market in a high inflation, slow growth economic environment,” Konter said. “The entry-level market has been particularly affected by declines for housing affordability and builders are adopting a more cautious stance as demand softens with higher mortgage rates.” Still, the index components measuring current sales conditions and future expectations remain positive, with the gauge of sales conditions scoring a 77 in June.

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