Homebuilders are feeling upbeat about where the new-home market stands currently as well as where it’s heading. Builder confidence in the newly built single-family home market surged in July, reaching the highest level since November 2005.
The National Association of Home Builders/Wells Fargo Housing Market Index reached a level of 60 in July. Levels over 50 indicate more builders are optimistic about sales expectations and buyer traffic.
“The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace,” says NAHB Chairman Tom Woods. “As we head into the second half of 2015, we should expect a continued recovery of the housing market.”
The increase in optimism coincides with recent data showing a pick-up in new and existing-home sales, as well as strong job growth, says NAHB Chief Economist David Crowe. However, Crowe notes, builders still face several headwinds, including shortages of lots and labor.
The NAHB/Wells Fargo Housing Market Index gauges builder sentiment over current single-family home sales and sales expectations for the next six months as well as builders’ view on buyer traffic. The components measuring current sales conditions increased one point in July to 66, while the index measuring sales expectations in the next six months increased two points to 71. The component measuring buyer traffic, on the other hand, slipped by a single point to 43.
Builders are most optimistic in the South, which had an HMI score at 61, followed by the West at 60; Midwest at 55; and Northeast at 47.
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