Builder confidence in the market for new single-family homes reached its strongest level since June 2006 in October, according to newly released data from the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index (HMI) rose one point to 41, rising slightly higher for the sixth month in a row in October
Builder confidence in the market for new single-family homes reached its strongest level since June 2006 in October, according to newly released data from the National Association of Home Builders (NAHB). The NAHB/Wells Fargo Housing Market Index (HMI) rose one point to 41, rising slightly higher for the sixth month in a row in October
The HMI components measuring current sales conditions and sales prospects for the next six months each remained unchanged in October at 42 and 51, respectively. Meanwhile, the component measuring traffic of prospective buyers increased 5 points to 35, its highest level since April 2006.
Builder confidence continued to improve in three out of four regions in October. Looking at three-month moving averages, the HMI gained two points in the Midwest and West to 42 and 44, respectively, and three points in the South, to 39. A three-month moving average for the Northeast's HMI was unchanged at 29.
"Many builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year," said NAHB Chairman Barry Rutenberg, a home builder from Gainesville, Fla. "The concern is that, even though demand for new homes is rising, overly tight credit conditions are still constraining new building and new purchases at a time when that kind of economic activity and the job growth it generates are greatly needed."
"The slight gain in builder confidence this month is an indication that, while still moving forward, the speed at which the housing recovery is proceeding is being moderated by the various constraints such as tight credit, difficult appraisals and more recently, the limited inventory of buildable lots in certain markets," said NAHB Chief Economist David Crowe. "These are the complicating factors that make it difficult for builder confidence to reach and surpass the 50-point mark, at which an equal number of builders view sales conditions as good versus poor."
