NAHB: Builder Confidence Posts 2-Point Gain in August

Builder confidence in the market for newly built single-family homes increased in August, with the NAHB Housing Market Index (HMI) notching a two-point gain to reach 37 and marking the fourth consecutive month of improvement.

Chart shows relationship between housing starts and HMI. Click chart to enlarge.

The latest improvement builds on a six-point increase in July and brings the index to its highest level since February of 2007. Broken down, every HMI component posted gains in August. The components gauging current sales conditions and traffic of prospective buyers each rose three points, to 39 and 31, respectively, while the component gauging sales expectations in the next six months inched up one point to 44. All were at their highest levels in more than five years.

"From the builder's perspective, current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years," said Barry Rutenberg, chairman of the NAHB and a home builder from Gainesville, Fla. "While there is still much room for improvement, we have come a long way from the depths of the recession and the outlook appears to be brightening."

Still, the HMI remaining below 50 indicates more home builders view sales conditions as poor than good.

Regionally, builder confidence rose nine points to 42 in the Midwest and two points to 35 in the South, but declined nine points to 25 in the Northeast and three points to 40 in the West in August. The current three-month moving averages show a two-point decline to 29 in the Northeast, a five-point gain to 35 in the Midwest, a three-point gain to 32 in the South and a three-point gain to 38 in the West.