Builder Confidence Increases For Single-Family Home Category

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Builder confidence in the single-family housing market increased by four points to a level of 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). It was the highest reading since May.

“This month’s report shows that home builders are rebounding from the initial shock of the hurricanes,” says NAHB Chairman Granger MacDonald. “However, builders need to be mindful of long-term repercussions from the storms, such as intensified material price increases and labor shortages.”

“It’s encouraging to see builder confidence return to the high 60s levels we saw in the spring and summer,” adds NAHB Chief Economist Robert Dietz. “With a tight inventory of existing homes and promising growth in household formation, we can expect the new home market to continue to strengthen at a modest rate in the months ahead.”

Resulting from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index measures 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 part 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 increases for October. The component measuring current sales conditions increased by five points to 75 and the index gauging sales expectations in the next six months increased five points to 78. The section measuring buyer traffic ticked up a single point to 48.