Home Builder Confidence Doubles September 2011 Measure

by devteam September 18th, 2012 | Share

The National Association of HomernBuilders (NAHB)/Wells Fargo Housing Market Index (HMI) which measures builderrnconfidence hit a six year high in September, marking the fifth month in a rowrnthat the index moved upward.  The HMIrnrose three points in September to reach 40, the highest reading since June ofrn2006.   Regional results rose as well asrndid the scores on the three indices underlying the HMI. </p

The HMI is based on a survey conductedrnmonthly among NAHB’s home builder members. The builders are asked to rankrncurrent home sales conditions as “good”, “fair”, or “poor” and to predictrnconditions six months hence on the same scale. rnThey are also asked to rank current buyer traffic as “high to veryrnhigh,” “average” or “low to very low”.  A score of 50 on any of the components or therncomposite index indicates that more respondents view conditions as good than asrnpoor.   </p

The component gauging current salesrnconditions rose 4 points to 42, the one measuring sales prospects over the nextrnsix months was up eight points to 51, and the component measuring traffic wasrnup one point to 31. The present levels for this survey are revealing whenrncompared to one year ago.  In Septemberrnof 2011 all three components and the HMI all within a range of 11 to 17 and MND’srnarticle that month said that the HMI had been trading in a range between 13 andrn16 for the previous six months. </p

“This fifth consecutive month ofrnimprovement in builder confidence provides further assurance that the housingrnmarket is moving in a positive direction, but there’s still a long way to go onrnthe road to recovery and several obstacles are slowing our progress,” saidrnNAHB Chairman Barry Rutenberg.  “Inrnparticular, unnecessarily tight credit conditions are preventing many buildersrnfrom putting crews back to work – which would create needed jobs — andrndiscouraging consumers from pursuing a new-home purchase.”<br /<br /"Builders across the country are expressing a more positive outlook onrncurrent sales conditions, future sales prospects and the amount of consumerrntraffic they are seeing through model homes than they have in more than fivernyears," noted NAHB Chief Economist David Crowe. "However, against thernimproving demand for new homes, concerns are now rising about the lack ofrnbuilding lots in certain markets and the rising cost of building materials.rnGiven the fragile nature of the housing and economic recovery, these arernsignificant red flags."<br /<br /Builder confidence also rose across every region of the country in September.rnLooking at the three-month moving average for each region, the Midwest and Westrneach registered five-point gains, to 40 and 43, respectively, while the Southrnposted a four-point gain to 36 and the Northeast posted a two-point gain to 30.

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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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