According to the National Association of Home Builders/Wells Fargo Housing Market Index, confidence during the fifth month of the year increased to 22. That three point increase over April’s results brings the index to the highest level seen since August 2007.
David Crowe, chief economist for the NAHB, said that expectations for home sales for the next six months continue to increase even though the tax credit came to an end on April 30.
“This means builders are more comfortable that the market is truly beginning to recover, and that positive factors for buying a new home – low interest rates, great selection, stabilizing prices, and a recovering job market – are taking the place of tax incentives to generate buyer demand,” Crowe said.
The government’s tax credit provided different levels of assistance based upon whether a consumer had ever purchased a home. First-time homebuyers could have gained as much as $8,000 for purchasing a home, while those consumers who were buying a replacement primary residence may have qualified for up to $6,500.
However, increasing foreclosures could have an effect on the market by flooding it with more homes, thereby reducing demand and prices.
According to a recent report from foreclosure website RealtyTrac, the number of housing units that were in the foreclosure process hit 333,837 during April, a 9 percent decline from March. On a year-over-year basis, foreclosure proceedings were down 2 percent, the company said.
One of the main factors that could drive both new-home sales and foreclosures is whether consumers are managing to find employment. According to the government, the unemployment rate increased to 9.9 percent in April after three months of hanging at 9.7 percent.
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