Builders Credit Consumers for Increased Optimism

News

New home builders regained some of the confidence in
the market they had displayed in September after wavering significantly in
October.  The National Association of
Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), a measure of
builder attitudes about the current and prospective market for newly built
single-family homes, rose four points to 58 this month after falling five
points from September to October.

The HMI is compiled from responses to a monthly survey NAHB conducts among
its new home builder members.  The survey
asks for their perceptions about current single family home sales and their
expectations for sales over 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.

Scores for all three HMI components increased this month.  The index rating current sales conditions
rose five points to 62, nearly offsetting a six point drop last month.  The index gauging future sales rose two
points to 66, one point below the September reading which had been the highest
in over a year.  The third component
measuring current buyer traffic was up four points to 45 after falling six
points in October.

“Low interest rates, affordable home prices and solid job creation are
contributing to a steady housing recovery,” said NAHB Chief Economist David
Crowe. “After a slow start to the year, the HMI has remained above the 50-point
benchmark for five consecutive months, and we expect the momentum to continue
into 2015.” 

Looking at the three-month moving averages for regional HMI scores, the
Northeast rose three points to 44, the South posted a four-point gain to 62,
and the West edged up one point to 58. The Midwest registered a two-point loss
to 57.

“Growing confidence among consumers is what’s fueling this optimism among
builders,” said NAHB Chairman Kevin Kelly “Members in many areas of the country
continue to see increasing buyer traffic and signed contracts.”

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