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Buyer
Traffic Surges,
Pushing Market Confidence
Up in
April
Builder
confidence in Kansas
City’s
new-home construction
market soared in April
as an improving economic
picture and the specter
of mortgage rate hikes
helped prime the pump
for new home permits,
starts and sales. The
Kansas City Housing
Market Index for single-family
detached homes gained
three points in April
to 76, the highest
reading since the HBA
began conducting the
survey last June. |
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April
HMI
Reports |
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Full
April Report
- PDF
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The
current conditions component
of the HMI, the most
heavily weighted of the
three components
came in at 81, up 4 points
from March. The
current
conditions component correlates
strongly with
new-home
permit activity, which
suggests April may be
a record-breaking month
for
new-home permits. A total
of 1,163 single-family
permits were issued in
March, and the HMI survey
indicates April’s
activity may be comparable.
The record for most single-family
permits issued in metro
Kansas City for the month
of April is the 993 permits
issued in 2002.
The
HMI traffic index rose
five points in April to
64, also the highest
level
recorded since the survey
began last year. While
the increase in traffic
ratings may be influenced
by seasonal factors, the
traffic index has climbed
18 points in the last
two months from 46 in
February.
The rise in traffic
correlates
with the recent gain in
mortgage rates. Many
housing
experts believe that
as
rates rise consumers will
be motivated to “buy
now” before
rates climb higher.
Concern
over the direction of
interest rates may have
played a
role in the level of builder
confidence in expected
marketing conditions
during
the next six months, which
registered a three-point
drop to 81 in April.
The
expected conditions component
for single-family detached
builders was the only
index to decline this
month.
While
the expected conditions
index remains very high,
the drop may signal some
uncertainty regarding
what changes may occur
in the
marketplace once the Federal
Reserve Board raises interest
rates. Mortgage rates
have already climbed in
anticipation
of a future rate hike.
At the end of April, the
national average for a
30-year fixed-rate mortgage
was around 6 percent.
Forecasts call for mortgage
rates
to top out between 6.2
percent and 6.4 percent
by the end of the year.
Confidence
in the market for
attached
homes also jumped
in
April.
The HMI for single-family
attached homes reached
71, two points above
the
previous high recorded
last July. Current
and
expected conditions
for
the attached market
both
measured 73. .
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