With the topsy terviness of the stock market and ups and downs of national headlines, it’s often difficult to determine if the economy is showing signs of recovery or not. It’s definitely still to early yet to claim victory, as so much is tenuous, but some key improvements have been posted in recent weeks that are worth noting.
First, there are tentative signs that buyers are beginning to return to the market. The National Association of Home Builders Housing Market Index (HMI), which gauges builder confidence in the single-family market, jumped five points in April, indicating that foot traffic in new homes is on the rise. This gain was the largest one-month increase recorded since May of 2003, and brings the HMI out of single-digit territory for the first time in six months – to 14. Every component of the HMI reflected the boost, with the biggest gain recorded for sales expectations in the next six months. At the same time, inventory of unsold new homes is being slowly whittled away.
NAHB Chief Economist David Crowe says this is a very encouraging sign that we are at or near the bottom of the current housing depression. He notes that the prime home buying season is underway and builders are reporting that more buyers are responding to the pull of much-improved affordability measures, including low home prices, extremely favorable mortgage rates and the introduction of the $8,000 first-time home buyer tax credit.”
It is important to note that housing has always been the first market to slip into recession during downturns, but it is also the first to bounce back and lead the rest of the economy out of recession. A strong housing market is key to economic recovery for our nation.
In fact, the limited impact that the recession has had thus far on Louisiana is largely because of the strong housing market and stable credit environment in our state. We have not seen the foreclosures or large drops in values that have impacted so many other areas. Clearly, our state is poised to rebound quickly as buyer confidence improves and the flow of credit is restored with the financial institutions.
Phil Hoffman is president of the Louisiana Home Builders Association.
