A lack of inventory of new homes is driving increased demand from home buyers who are determined to reside in new construction.
This pent-up demand, in turn, has helped boost builder confidence in the market.
As a result, the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) has increased four points in December to reach 58.
All three index components – current sales conditions, sales expectations and traffic of prospective buyers – were up for the month, the NAHB says in a release.
‘This is definitely an encouraging sign as we move into 2014,’ says Rick Judson, a home builder from Charlotte, N.C., and chairman of the NAHB. ‘The HMI is up 11 points since December 2012 and has been above 50 for the past seven months. This indicates that an increasing number of builders have a positive view on where the industry is going.’
‘The recent spike in mortgage interest rates has not deterred consumers as rates are still near historically low levels,’ adds David Crowe, chief economist for the NAHB.Â ‘Following a two-month pause in the index, this uptick is due in part to the release of the pent-up demand caused by the uncertainty generated by the October government shutdown. We continue to look for a gradual improvement in the housing recovery in the year ahead.’
For more, including details on the report's methodology, click here.