Builder confidence is up in August, particularly among builders of single-family homes, according to one national builders’ organization.
The National Association of Home Builders (NAHB) says the August builder confidence level rose four points over the July level to 68.
The NAHB/WellsFargo Housing Market Index (HMI) surveys commercial and residential builders across the U.S. and assigns a numeric level based on responses. Any level over 50 is considered an indication in strong confidence and any level under 50 is considered a lack of confidence.
“Our members are encouraged by rising demand in the new-home market,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas. “This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.”
“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said NAHB Chief Economist Robert Dietz. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”
The HMI surveys, which NAHB has conducted for 30 years, judges builder responses to its surveys in three primary areas: perceptions of current home sales, expectations for the next six months and the number of prospective home buyers which builders actually see.
“All three HMI components posted gains in August,” said NAHB. “The component gauging current sales conditions rose four points to 74 while the index charting sales expectations in the next six months jumped five points to 78. Meanwhile, the component measuring buyer traffic increased a single point to 49.”