The index is near record level territory, driven by consumer demand and the optimism builders are feeling. However, the high demand may be too much for builders if enough suitable lots can’t be found, this according to National Association of Home Builders Chairman Randy Noel in a recent press release.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) is projecting increased activity in construction of homes in March. This is great news for small contractors, electricians, plumbers and other businesses likely to be hired to build these homes. But the projection is being met with concern as contractors worry there won’t be enough buildable lots.
March 2018 NAHB Housing Market Index
The index is an indicator of how the housing market will perform. And for many small contractors, electricians, plumbers, and all other related businesses involved in the building of these homes, it forecasts how well they will do.
To create the index, market conditions of present-day new-home sales and the next six months are rated good, fair or poor. Prospective buyer traffic for new homes is also rated as high to very high, average or low to very low.
A range between zero and 100 is calculated based on weighted average and a seasonally adjusted index. Ratings of more than 50 indicate builders view sales conditions as good instead of poor.
Hence a rating of 70 for March is clearly big news.
The growth in the segment is due to a robust labor market, higher incomes and an economy still in growth. This has increased demand for home ownership. National Association of Home Builders Chief Economist Robert Dietz, explains in the press release. “With these economic fundamentals in place, the single-family sector should continue to make gains at a gradual pace in the months ahead.”
Among the factors entering into the overall projection, the Home Market Index showed a rating of 77 for March, while expectations for single family homes over the next 6 months showed a rating of 78 and buyer traffic was down by three points to 51.
Projections for home building are highest in the Western United States with a rating of 78. Meanwhile, projections are 74, 65 and 56 in the Southern, Midwestern and Northeastern U.S. respectively. See more of the index numbers below
What is the Housing Market Index (HMI)?
The National Association of Home Builders/Wells Fargo Housing Market Index has been used to gauge the outlook of the US housing sector for the past 30 years. The data is gathered from a survey of the National Association of Home Builders’ more than 140,000 members and over 800 state and local associations.
Rapid Value Assessment – Increasingly Versatile
The Rapid Value Assessment Process has grown over time to stay abreast of changing innovation needs. Although the basic premise hasn’t changed, there are some innovative twists to addressing “How does the market value our concept?”
Some of the more innovative RVA approaches include
- Vertical RVAs: Vertical RVAs are co-sponsored by both an upstream and downstream player in the value adding chain. These development partnerships not only identify even more promising innovations, but also accelerate the development process even faster.
- Hybrid RVAs: Hybrid RVAs add some key quantitative questions to the engagement. They are especially critical when we want to marry outcomes to the concept features. They add clarity to expectations. Some have even added pricing options to the value assessments.
- Clustering RVAs: Clustering RVAs involve investigating related concepts simultaneously, giving the participants the opportunity to compare value to cost options.
- Extended RVAs: Extended RVAs involve moving on to a quantitative product evaluation on the fly. Learnings lead to an opportunity to prototype concepts early on to better align product features to user needs.
Have you seen or are you utilizing similar innovation acceleration tools? Let us know!
