The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) increased 1 point in September. Along with an upward revision to the August number, that carried the HMI to its highest level of the year. The September reading was 68 and the August HMI was revised from 66 to 67. The index is a measure of builders confidence in the market for newly constructed homes and has held in the mid-to-upper 60s since May.
NAHB Chairman Greg Ugalde said, "Low interest rates and solid demand continue to fuel builders' sentiments even as they continue to grapple with ongoing supply-side challenges that hinder housing affordability, including a shortage of lots and labor."
"Solid household formations and attractive mortgage rates are contributing to a positive builder outlook," said NAHB Chief Economist Robert Dietz. "However, builders are expressing growing concerns regarding uncertainty stemming from the trade dispute with China. NAHB's Home Building Geography Index indicates that the slowdown in the manufacturing sector is holding back home construction in some parts of the nation, although there is growth in rural and exurban areas."
Derived from a monthly survey that NAHB has been conducting for 30 years, the Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
Builder sentiment drove the component gauging current sales conditions up 2 points to 75 although the responses about expectations over the next six months were down 1 point to 70. The component measuring traffic of prospective buyers held steady at 50.
Regional scores are reported as three-month moving averages. The indexes for the Northeast and the West each posted a 2-point gain to 59 and 75 respectively. The South moved 1 point higher to 70 and the Midwest was unchanged at 57.