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Builder Confidence in August at Highest Point in Nearly 8 Years

by Peter Thomas Ricci

Builder confidence continued its upward trend in August, rising to its highest mark since 2005.

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August has proven another sterling month for homebuilders, with the National Association of Home Builders/Wells Fargo Housing Market Index, the leading measure of builder confidence in the housing market, rising three points to 59.

That’s the fourth straight monthly gain for the Housing Market Index, which is now at its highest mark since 2005.

Housing Market Index – Party Like it’s 2005

David Crowe, the NAHB’s chief economist, said that builder confidence has strengthened alongside other key housing market fundamentals.

“Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets,” Crowe said.

Other key findings in the Housing Market Index included:

  • Any index reading above 50 indicates that more homebuilders see market conditions as good than those who see them as bad, so at 59, the majority of homebuilders are positive on housing.
  • Two of the index’s three components also increased in August. The component gauging current sales conditions rose three points to 62, while the component gauging sales expectations in the next six months gained a single point to 68.
  • Only the component measuring traffic of prospective buyers did not increasing, holding firm at 45.
  • Regionally, the news was similarly solid, with the Housing Market Index rising six points in the Midwest and West to 60 and 57, respectively, and four points in the South to 54; the index was unchanged in the Northeast at 39.

Rick Judson, the NAHB’s chairman, reiterated that homebuilders are seeing a breed of homebuyer that they have not seen in some time.

“Builders are seeing more motivated buyers walk through their doors than they have in quite some time,” Judson said. “What’s more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.”

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