Builder confidence as measured by the National
Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI)
increased for the fourth straight month in August. The HMI gained two points to rise to 37, the
highest for the index since February 2007.
The HMI is based on a survey conducted
monthly among NAHB's home builder members. The builders are asked to rank current
home sales conditions as "good", "fair", or "poor" and to predict conditions
six months hence on the same scale. They
are also asked to rank current buyer traffic as "high to very high,"
"average" or "low to very low".
A score of 50 on any of the components or the composite index indicates
that more respondents view conditions as good than as poor.
The three components as well as the
composite all posted gains to rise to the highest levels in over five years. The component gauging traffic of prospective
buyers rose from 28 to 31 and the one measuring current sales conditions was up
three points to 39. The component gauging sales expectations over
the next six months was up one point to 44.
"From the builder's perspective,
current sales conditions, sales prospects for the next six months and traffic
of prospective buyers are all better than they have been in more than five
years," said Barry Rutenberg, chairman of NAHB. "While there is still much room for
improvement, we have come a long way from the depths of the recession and the
outlook appears to be brightening."
"This fourth consecutive increase in builder confidence provides further
evidence of the gradual strengthening that's occurring in many housing markets
and providing a needed boost to local economies," said NAHB Chief
Economist David Crowe. "However, we are still at a very fragile stage of
this process and builders continue to express frustration regarding the
inventory of distressed properties, inaccurate appraisal values, and the
difficulty of accessing credit for both building and buying homes."
Not all builders however were upbeat. Confidence was up nine points to 42 in the
Midwest and two points in the South to 35 but fell nine points in the Northeast
and three points in the West to 25 and 40 respectively.
For the first time
NAHB is using a three month regional moving index to show an alternative trend
comparison. The average was down 2
points to 29 in the Northeast but rose in the other three regions; 5 points to
35 in the Midwest, three points to 32 in the South and 3 points to 38 in the