NAHB: Builder Confidence Rises For Fourth Consecutive Month

Builder confidence in the market for newly built single-family homes rose for the fourth consecutive month in August, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.

The index rose to 59 points from 56 points in July, the NAHB reports.

‘Builders are seeing more motivated buyers walk through their doors than they have in quite some time,’ says Rick Judson, chairman of the NAHB and a home builder from Charlotte, N.C. ‘What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market.’

‘Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets,’ adds David Crowe, chief economist for the NAHB. ‘However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor.’

The index gauges builder confidence in the market by way of a monthly survey. Participants are asked for their perceptions of current single-family home sales and asked to rate their expectations for the next six months as ‘good,’ ‘fair’ or ‘poor.’

Similarly, the survey asks builders to rate interest from 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.

For the August report, the component gauging current sales conditions rose three points to 62, while the component gauging sales expectations in the next six months gained a single point, rising to 68. The component gauging traffic of prospective buyers was unchanged at 45.

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