Builder Confidence at near Nine Year High

A four point jump in September has taken thernNational Association of Home Builders (NAHB)/Wells Fargo Housing Market Indexrn(HMI) to its highest reading since November of 2005.  The increase, the fourth in as many months, elevatedrnthe composite measure of builder confidence in the market for new homes to 59.</p

The HMI is derived from responses new home builders give to a monthly surveyrnwhich NAHB has conducted for 30 years. rnBuilders are asked for their perceptions of current single-family homernsales and their expectations for those sales over the next six months ranked asrn”good,” “fair” or “poor.”  The survey alsornasks them to gauge current buyer traffic as “high to very high,” “average” orrn”low to very low.” Scores from each component are then used to calculate arnseasonally adjusted composite index, the HMI. rnScores over 50 for the HMI or any of its components indicates that morernbuilders view conditions as good than poor.</p

The index measuring current sales conditions rose five points to 63 and thernone regarding future expectations was up two points to 67.  The measure of current traffic gained fivernpoints but at 47 remains below the milestone 50 level where it has been sincernSeptember 2005.</p

“Since early summer, builders in many markets across the nation have beenrnreporting that buyer interest and traffic have picked up, which is a positivernsign that the housing market is moving in the right direction,” said NAHBrnChairman Kevin Kelly.  </p

NAHB Chief Economist David Crowe said that a firming job market is helping tornfree up some pent-up demand for new homes and increasing builder confidence, butrnfirst-time home buyers are still missing in action.  “Other factors impeding the pace of thernhousing recovery include persistently tight credit conditions for consumers andrnrising costs for materials, lots and labor.”<br /<br /The increase in builder confidence touched every region in September.  The three-month moving average for thernMidwest registered a five-point gain to 59, the South posted a four-pointrnincrease to 56, the Northeast recorded a three-point gain to 41 and the Westrnposted a two-point increase to 58.

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