Builders Credit Consumers for Increased Optimism

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

The HMI is compiled from responses to a monthly survey NAHB conducts amongrnits new home builder members.  The surveyrnasks for their perceptions about current single family home sales and theirrnexpectations for sales over the next six months as “good,” “fair” or “poor.”rnThe survey also asks builders to rate traffic of prospective buyers as “high tornvery high,” “average” or “low to very low.” Scores from each component are thenrnused to calculate a seasonally adjusted index where any number over 50rnindicates that more builders view conditions as good than poor.</p

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

“Low interest rates, affordable home prices and solid job creation arerncontributing to a steady housing recovery,” said NAHB Chief Economist DavidrnCrowe. “After a slow start to the year, the HMI has remained above the 50-pointrnbenchmark for five consecutive months, and we expect the momentum to continuerninto 2015.” </p

Looking at the three-month moving averages for regional HMI scores, thernNortheast rose three points to 44, the South posted a four-point gain to 62,rnand the West edged up one point to 58. The Midwest registered a two-point lossrnto 57.</p

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

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