WASHINGTON, DC — On the heels of record-breaking home sales this summer, builders are adjusting their expectations to reflect a lower, but still robust level of activity in the market for new single-family homes, according to the National Association of Home Builders (NAHB) Housing Market Index (HMI). The August HMI declined four points to 57, its lowest level since year-end 2001, after holding within one point of 60 for the last five months.

“This is something of an expected ‘reality check’ following the exceptionally strong activity of early summer,” said Gary Garczynski, NAHB president. “Builders remain justifiably confident in a market in which buyer demand is being bolstered by historically low interest rates on home mortgages. They simply view overall conditions as healthy and stable rather than extraordinary.”

The HMI is derived from a monthly survey of builders that NAHB has been conducting for almost 20 years. The average index reading over this period has been 54. Scores for responses to each component are used to arrive at a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

All of the HMI’s component indexes slipped in August. However, NAHB continues to forecast that sales of new homes this year will surpass last year’s record 908,000 units.

Publication date: 08/19/2002