Posted on: Friday, December 17, 2004
Gauge reflects continued demand for new homes
By Courtney Schlisserman
Bloomberg News Service
A gauge of U.S. homebuilder optimism rose this month to the highest level of the year, a private survey found.
The National Association of Home Builders' measure of builder confidence in demand for single-family houses rose to 71 from 70 in November. The index has exceeded 60 since May 2003.
Mortgage rates below 6 percent continue to bring prospective buyers into the market, bolstering builders' outlook for demand. The National Association of Realtors last week raised forecasts for new home sales this year to a record 1.18 million.
"Buyer demand continues to keep builders busy," home-builders' president Bobby Rayburn said.
The index was expected to slip to 70, the median of 17 economist forecasts in a Bloomberg News survey, from an originally reported 71 for the past month. Estimates ranged from 69 to 73.
A reading greater than 50 means builders view market conditions as more positive than negative.
The Mortgage Bankers Association's index of applications to purchase homes fell 0.4 percent last week to 488.9. That was still close to the record 501.6 the group reported in January.
"We see very strong demand patterns across the country in most major markets," said Stuart Miller, chief executive of Lennar Corp., the second-largest U.S. homebuilder.
The National Association of Home Builders' gauge of buyer traffic rose to 52 from 51 in November. The measure of current sales held at 77 this month, and that of sales expectations for the next six months rose to 79 from 78.
The average rate on a 30-year fixed mortgage has been 5.85 percent so far this year, according to figures from Freddie Mac. Rates have stayed below 6 percent since the end of July and last week fell to 5.71 percent.
The National Association of Realtors and other groups see demand tapering off next year as interest rates rise and the pool of eligible homebuyers shallows. The group expects the average rate on a 30-year fixed mortgage to be 6.4 percent next year.
