According to NAHB president Bruce Smith, March's HMI is the highest reading of builder optimism since November 2000 and indicates significant strength remains in the housing market. Even so, the HMI is still 18 points below its late 1998 peak and is well below the average of the last three years.
"Home builders continued to express confidence that low interest rates were helping offset effects of broader economic weakening and deteriorating consumer confidence to keep buyer demand on track," says Smith. "It's also likely that the solid investment aspects of homeownership have buoyed housing demand as problems in the stock market have deepened."
The HMI is derived from a monthly survey in which home builders are asked to rate current sales and sales expectations for the next six months, along with traffic of prospective buyers. The scores are then compiled into a seasonally adjusted index, and any number above 50 indicates more builders view sales conditions as good than poor.
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