Builder Confidence Highest Since February 2018

October 17th, 2019 by Editor

Builder confidence in the market for newly-built single-family homes rose three points to 71 in October, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released yesterday. Sentiment levels are at their highest point since February 2018.

“The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said NAHB chief economist Robert Dietz. “However, builders continue to remain cautious due to ongoing supply side constraints and concerns about a slowing economy.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI 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.

All the HMI indices posted gains in October. The current sales conditions (78) increased three points, sales expectations in the next six months (76) jumped six points and traffic of prospective buyers (54) rose four points.

“The housing rebound that began in the spring continues, supported by low mortgage rates, solid job growth and a reduction in new home inventory,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

The three-month moving averages for all regional HMI scores were up: the Northeast (60) and Midwest (58) were both up one-point, and the South (73) and West (78) both increased by three points.

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