Faith in New Home Market at 18-Year High


Builder confidence shot up in December, reaching the
highest level
the National Association of Home Builders (NAHB) has recorded in
18 years
.  NAHB said its Housing Market
Index (HMI), which is cosponsored by Wells Fargo, gained 5 points to 74 from a
downwardly revised (from 70) November reading.

The Index, which measures NAHB’s new home builder-members
confidence in the market for newly constructed homes, was last at this level in
July 1999.  NAHB has been conducting the monthly
survey for more than 30 years.

asks builders for their 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 three HMI components registered
gains in December. The component measuring buyer traffic, which has surpassed
the 50-point mark in only a scattered few months since the early 2000s, jumped
eight points to 58.  The index gauging
current sales conditions
rose four points to 81 and the index charting sales
in the next six months increased three points to 79.

NAHB Chief Economist Robert Dietz
said of the results, “The HMI measure of home buyer traffic rose eight points,
showing that demand for housing is on the rise. With low unemployment rates,
favorable demographics and a tight supply of existing home inventory, we can
expect continued upward movement of the single-family construction sector next

Regional scores are presented as three-month
moving averages. The Midwest climbed six points to 69, the South rose three
points to 72, the West increased two points to 79 and Northeast inched up a
single point to 54.

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