of builder confidence in the new home market rose again this month. The third consecutive monthly increase in the
National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index
(HMI) brought that metric back to its highest level since January.
The HMI was
at 55 in August, a two point gain from July.
The number is a composite based on responses to a monthly survey in
which new home builders are asked for their perceptions about current
single-family home sales and future prospects for such sales. Any score over 50 indicates more builders
perceive the market as good than perceive it as poor.
"As the employment picture
brightens, builders are seeing a noticeable increase in the number of serious
buyers entering the market," said NAHB Chairman Kevin Kelly. "However, builders
still face a number of challenges, including tight credit conditions for
borrowers and shortages of finished lots and labor."
In the survey, which NAHB has been
conducting for 30 years, respondents are asked to rank home sales at present
and their expectations for sales over the upcoming six months as "good," "fair"
or "poor." They are also asked to rate traffic
of prospective buyers as "high to very high," "average" or "low to very low." Each individual component receives a score
from which the composite is derived.
Each of the three components posted
gains in August. The indices gauging current sales conditions and expectations
for future sales (6-month/longer-term home sales outlook) each rose two points to 58 and 65, respectively. It was the highest score for the future sales
index since August 2013 when it was at 68.
The index gauging traffic of prospective buyers increased three points
to 42 but continues to drag down the composite score. The buyer traffic measure, which finally
climbed above 20 in January 2012 after 5-1/2 years in the teens was last above
the milestone 50 mark in October 2005.
"Each of the three components of the
HMI registered consecutive gains for the past three months, which is a positive
sign that builder confidence appears to be firming following an uneven spring,"
said NAHB Chief Economist David Crowe. "Factors contributing to this rise
include sustained job growth, historically low mortgage rates and affordable
home prices, which are helping to unleash pent-up demand."
Every region saw a gain in its
three-month moving average HMI score in August. The Midwest posted a seven-point
increase to 55 and the West registered a four-point gain to 56. The Northeast
posted a two-point gain to 38 and the South was up one point to 52.