PNC economist Abbey Omodunbi

Omodunbi

The NAHB (National Association of Home Builders) Housing Market Index increased slightly to 83 in April from 82 in March. The NAHB Index remains very strong, well above the 50-point threshold.

The NAHB Housing Market Index gauges builder sentiment among builders of single-family homes; a reading of above 50 indicates that more single-family homebuilders view conditions as positive while a reading of below 50 indicates that more single-family home builders view conditions as negative. After falling below the 50-point threshold in April and May, the NAHB Housing Market Index has remained above the 50-point threshold in every month since June.

Details of the report were mixed. The current sales conditions component which makes up 60% of the NAHB HMI increased slightly to 88 in April from 87 in March, the future (next six months) sales conditions component fell to 81 from 83 in March and the prospective buyers traffic component rose to 75, the highest level since November, from 72 in March.

The housing sector will strengthen over the course of 2021 as economic fundamentals improve; the labor market is improving with job growth averaging 539,000 in the three months through March, up from just 64,000 in the three months through January. Mortgage rates remain very low. Household balance sheets are in sterling shape, household debt service and financial obligation ratios are near historic lows. Supported by strong fundamentals, the residential housing sector will continue to contribute to economic growth in 2021.

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