Winter Wonder: Builders Gain Confidence in November

November 19th, 2014 by Editor

Heading into the winter months, single-family homebuilder confidence is actually rising, not falling.

That’s according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which has builders’ confidence up to a level of 58 points.

“Growing confidence among consumers is what’s fueling this optimism among builders,” says NAHB chairman Kevin Kelly, a home builder and developer from Wilmington, Del. “Members in many areas of the country continue to see increasing buyer traffic and signed contracts.”

NAHB chief economist David Crowe sees the uptick in confidence continuing for more than just November.

“Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery. After a slow start to the year, the HMI has remained above the 50-point benchmark for five consecutive months, and we expect the momentum to continue into 2015,” Crowe said.

Derived from a monthly survey that NAHB has been conducting for 30 years, the HMI 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 from 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.

All three HMI components increased in November. The index gauging current sales conditions rose five points to 62, while the index measuring expectations for future sales moved up two points to 66 and the index gauging traffic of prospective buyers increased four points to 45.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose three points to 44, the South posted a four-point gain to 62, and the West edged up one point to 58. The Midwest was the only region to that experienced a loss, down two points to 57.

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