Home Builder Confidence Rises Again in October

Builder confidence in the market for newly constructed single-family homes increased for the fifth consecutive month, reaching a 10-year high, the National Association of Home Builders reported yesterday.  

The NAHB/Wells Fargo Housing Market Index rose by three points in October to 64. The index measuring sales expectations in the next six months rose seven points to 75, while the component gauging current sales conditions increased three points to 70. Meanwhile, the index charting buyer traffic held steady at 47.  

Looking at the three-month moving averages, all four regions posted gains. The West registered a five-point uptick to 69 while the Northeast, Midwest and South each rose one point to 47, 60 and 65, respectively. Any number above 50 indicates that more builders view conditions as good than poor.  

NAHB Chief Economist David Crowe said the reading brings the index to the same level at the end of the housing boom in late 2005. “This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” he said. “With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015.”  

Earlier this month, the Mortgage Bankers Association Builder Application Survey data for September showed mortgage applications for new home purchases increased by 3 percent. MBA Vice President of Research and Economics Lynn Fisher said positive momentum in mortgage applications to home builder affiliates suggest that housing starts will continue to post relatively strong numbers through the end of the year.

“The rise in the home builders’ index reflects improving conditions, particularly in the West and South, where builders have been selling homes faster than they can build them,” said Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C.