Builder Confidence Hits Five Year Highs in NAHB Survey

by devteam August 15th, 2012 | Share

Builder confidence as measured by the NationalrnAssociation of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)rnincreased for the fourth straight month in August.  The HMI gained two points to rise to 37, thernhighest for the index since February 2007.</p

The HMI is based on a survey conductedrnmonthly among NAHB’s home builder members. The builders are asked to rank currentrnhome sales conditions as “good”, “fair”, or “poor” and to predict conditionsrnsix months hence on the same scale.  Theyrnare also asked to rank current buyer traffic as “high to very high,”rn”average” or “low to very low”. rnA score of 50 on any of the components or the composite index indicatesrnthat more respondents view conditions as good than as poor.   </p

The three components as well as therncomposite all posted gains to rise to the highest levels in over five years.  The component gauging traffic of prospectivernbuyers rose from 28 to 31 and the one measuring current sales conditions was uprnthree points to 39.   The component gauging sales expectations overrnthe next six months was up one point to 44.</p

“From the builder’s perspective,rncurrent sales conditions, sales prospects for the next six months and trafficrnof prospective buyers are all better than they have been in more than fivernyears,” said Barry Rutenberg, chairman of NAHB.  “While there is still much room forrnimprovement, we have come a long way from the depths of the recession and thernoutlook appears to be brightening.”<br /<br /"This fourth consecutive increase in builder confidence provides furtherrnevidence of the gradual strengthening that's occurring in many housing marketsrnand providing a needed boost to local economies," said NAHB ChiefrnEconomist David Crowe. "However, we are still at a very fragile stage ofrnthis process and builders continue to express frustration regarding therninventory of distressed properties, inaccurate appraisal values, and therndifficulty of accessing credit for both building and buying homes."</p

Not all builders however were upbeat.  Confidence was up nine points to 42 in thernMidwest and two points in the South to 35 but fell nine points in the Northeastrnand three points in the West to 25 and 40 respectively.  </p<pFor the first timernNAHB is using a three month regional moving index to show an alternative trendrncomparison.  The average was down 2rnpoints to 29 in the Northeast but rose in the other three regions; 5 points torn35 in the Midwest, three points to 32 in the South and 3 points to 38 in thernWest.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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