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Builder Confidence Riding High in August
Despite edging down a bit, builder confidence in the single-family housing market has continued in August to ride high for the 17th consecutive month, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), which was released last week.
"The August HMI of 67, which is down three points from this July and August of last year, indicates that builders still remain upbeat about the housing market," said NAHB President Dave Wilson. "Demand for new homes is still strong, and even though mortgage interest rates have edged up in recent weeks, they are still highly affordable, with the average rate for a 30-year, fixed-rate loan hovering around 5.9%."
"The August HMI is consistent with the ratings that we have seen so far this year, and builder attitudes suggest that new home sales and starts will continue to be brisk in the coming months," said David Seiders, NAHB's chief economist.
Seiders added that even in today’s buoyant marketplace builders are not entirely worry-free. Concerns include “the high cost of land and shortages of lots for home building, particularly in the West and in parts of the South and the Northeast,” he said. “In the Midwest, builders are concerned about local economic conditions and job losses, particularly in the auto industry, and that is reflected in the confidence measures for that region."
Derived from a monthly survey that NAHB has been conducting for some 20 years, the index gauges builder perceptions of current single-family home sales, sales expectations for the next six months and the traffic of prospective buyers. Any number over 50 indicates that more builders view sales conditions as good than poor.
The builders’ assessment of urrent sales activity was off four points in August, dropping from 76 to a still upbeat 72, while expectations for sales remained unchanged at 77. Home buyer traffic declined from 55 to 50.
Regionally, confidence climbed only in the Northeast, rising from 69 to 71. Confidence eased down from 88 to 85 in the West, 74 to 73 in the South and 48 to 45 in the Midwest.
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