Home builder
confidence in the market for newly built, single-family homes rose six points
to 57 on the National Association of Home Builders/Wells Fargo Housing Market
Index (HMI) for July, released July 16th. This is the third
consecutive monthly gain for the index and its strongest reading since January
of 2006.
Derived
from a monthly survey that NAHB has been conducting for 25 years, the
NAHB/Wells Fargo Housing Market 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 from 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.
All
three HMI components posted gains in July. The component gauging current sales
conditions rose five points to 60 – its highest level since early 2006.
Meanwhile, the component gauging sales expectations in the next six months
gained seven points to 67 and the component gauging traffic of prospective
buyers rose five points to 45 – marking the strongest readings for each since
late 2005.
All
four regions also posted gains in their HMI scores’ three-month moving
averages. The Northeast showed a four-point gain to 40 while the Midwest
reported an eight-point gain to 54, the South posted a five-point gain to 50
and the West measured a three-point gain to 51.
According
to NAHB Chairman Rick Judson, the report is particularly encouraging since it shows
a rise in builder confidence “across every region as well as solid gains in
current sales conditions, traffic of prospective buyers and sales expectations
for the next six months.” However, he cautioned that “This positive momentum
could be disrupted by threats on the policy side, particularly with regard to
the mortgage interest deduction and federal support for the housing finance
system.”
With
the recent rise in mortgage rates, builders are seeing more motivated buyers
and existing inventory continues to tighten. NAHB Chief Economist David Crowe stated,
“as the infrastructure that supplies home building returns, some previously
skyrocketing building material costs have begun to soften.”
HMI
tables can be found at nahb.org/hmi. More information on housing
statistics is also available at housingeconomics.com.
From NAHB reports.