Homebuilders are feeling more confident about the state of their
industry than they have in over six years, according to new survey
data from their trade organization.
The National Association of Homebuilders reported today that
their index of builder confidence, reflecting the market for
construction of single-family homes, rose to a reading of 40 in
September. That's the highest value reported since June 2006 and a
three-point gain over last month.
It's the fifth consecutive monthly increase for the index, which
is based on a 100-point scale. A reading of 50 means that builders
are evenly divided as to whether conditions are good or poor.
"Builders across the country are expressing a more positive
outlook on current sales conditions, future sales prospects and the
amount of consumer traffic they are seeing through model homes than
they have in more than five years," said David Crowe, NAHB chief
economist. At the same time, Crowe expressed concerns that rising
costs for building materials and a lack of building lots in certain
markets could impede a recovery in housing.
Home construction trending upward
Construction figures show why builders are feeling more
optimistic. According to recent data from the Census Bureau, new
single-family home construction was up 17 percent in July compared
to one year earlier, while building permits issued for
single-family homes were up 23 percent over the same period.
The builder's index has shown dramatic improvement over the past
year, rising from a dismal 14 in September 2011. Since the housing
crash in late 2007, the index had previously remained almost
exclusively in the teens and high single digits.
On a regional basis, builders were most optimistic in the West
and Midwest, with three-month averages of 43 and 40 in their
regional scores, respectively, each of them a five-point gain from
last month. The three-month average for the South showed a
four-point gain to 36, while the Northeast had a two-point gain to
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