
Builder Confidence Hits 10-Year High
The National Association of Home Builders reported confidence in the market for newly constructed single-family homes rose again in September, reaching its highest level since October 2005.
The NAHB/Wells Fargo Housing Market Index increased by one point to 62 this month. The index measuring buyer traffic increased by two points to 47, while the component gauging current sales conditions rose by one point to 67. The index charting sales expectations in the next six months dropped from 70 to 68.
Regionally, the West and Midwest each rose by one point to 64 and 59, respectively. The South also posted a one-point gain to 64, while the Northeast dropped one point to 46.
Last week, the Mortgage Bankers Association Builder Application Survey data for August show mortgage applications for new home purchases fell for the second consecutive month, dropping by 6 percent from July. MBA estimated new single-family home sales ran at a seasonally adjusted annual rate of 524,000 units in August, a 1.9 percent decrease from July (534,000).
NAHB Chairman Tom Woods said while the Index showed “solid progress,” underlying data suggest continued “concerns about the availability of lots and labor.”
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the report’s headline and underlying details indicate a steady rise of homebuilder confidence, which is positive for our housing starts outlook.
“Home builders continue to feel optimistic about overall market fundamentals,” Vitner said. “The slight decrease in future sales is likely due to uncertainty about Fed policy and the global economy.”
NAHB Chief Economist David Crowe said the trade group projects 1.1 million total housing starts for 2015. “Today’s report is consistent with our forecast, and barring any unexpected jolts, we expect housing to keep moving forward at a steady, modest rate through the end of the year,” he said.
The Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.