Low mortgage interest rates around 5 percent and a federal tax credit appear to be helping builders to win customers.
(Matt York/Associated Press)
Builders’ index signals optimism
Low mortgage interest rates around 5 percent and a federal tax credit appear to be helping builders to win customers.
(Matt York/Associated Press)
MIAMI - The National Association of Home Builders said its housing market index rose two points in February, a sign that low interest rates and federal tax credits are boosting demand for homes. The index reached 17 in February, after falling for two consecutive months.
The increase may signal builders are feeling better about their prospects following data that the job market could be improving. The Labor Department said last week that the number of newly laid-off workers seeking unemployment benefits fell to 43,000, the lowest in a month.
Meanwhile, interest rates for mortgages are hovering around 5 percent, pushed down by the Federal Reserve’s program to buy mortgage-backed securities. And builders say they are seeing the effects of the tax credits of up to $8,000 for first-time buyers and $6,500 for current homeowners who move.
“Builders are slightly more optimistic that the housing recovery is finally beginning to take root,’’ said Bob Jones, the group’s chairman.
Still, a high number of foreclosures and a lack of financing for new projects remain problems. Mortgage rates could go up after the Fed’s program ends this spring. And buyer demand could wane after the April 30 deadline for the tax credit.
The index reflects a survey of 528 residential developers. Readings below 50 indicate negative sentiment about the market. The last time it was above 50 was in April 2006.
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