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Builder Confidence at Highest Level Since Nov. 2005

by Peter Thomas Ricci

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Builder confidence in the market for newly built, single-family homes in August rose one point to a level of 61 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). That is the highest reading since November 2005.

David Crowe, the NAHB’s chief economist, said wider economic trends should maintain the HMI’s positive trend.

“Today’s report is consistent with our forecast for a gradual strengthening of the single-family housing sector in 2015,” Crowe said. “Job and economic gains should keep the market moving forward at a modest pace throughout the rest of the year.”

Derived from a monthly survey that NAHB has been conducting for 30 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 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.

Two of the three HMI components posted gains in August. The index measuring buyer traffic increased two points to 45 and the component gauging current sales conditions rose one point to 66. Meanwhile, the index charting sales expectations in the next six months held steady at 70.

Looking at the three-month moving averages for regional HMI scores, the West and Midwest each rose three points to 63 and 58, respectively. The South posted a two-point gain to 63 and the Northeast held steady at 46.

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