A measure of builder optimism climbed in May for the first time in five months, a National Association of Home Builders/Wells Fargo index of builder confidence showed yesterday. The gauge rose to 44 from 41 in April, according to the Washington-based group.
“There is no question there is a lot of positive momentum in the marketplace,” Ara Hovnanian, chairman and chief executive officer at Red Bank, New Jersey-based builder Hovnanian Enterprises Inc., said at a May 9 conference. “In terms of sales, office activity and traffic, we’re feeling positive momentum.”
The Federal Reserve’s efforts to keep mortgage costs low have helped bring about a turnaround in housing, the industry that was at the center of the worst recession since World War II.
Cheaper borrowing costs are attracting buyers with access to credit. The average rate on a 30-year, fixed purchase loan was 3.42% for the week ended May 9, down from 3.83% a year ago, according to McLean, Virginia-based Freddie Mac. The rate reached a record low of 3.31% in November.
Suppliers have been racing to keep pace. Sales at Ply Gem Holdings Inc. in Cary, North Carolina, increased 7.5% in the first quarter compared with a year earlier on demand for its windows, doors, vinyl siding and other construction materials.
A strengthening housing market also is giving a lift to brokers and mortgage lenders. Redwood Trust Inc. is helping to meet growing demand for large purchase-money mortgages known as jumbos. The real-estate financing company, based in Mill Valley, California, issued about $2.5 billion worth of home loan securities in 2012 and expects to issue $8 billion this year.
“Now is a great time to be taking credit risk on newly originated loans,” Redwood President Brett Nicholas said at a May 14 conference. “There has been a recovery in housing, particularly in the jumbo markets, really nationwide because housing has really come back strong.”