Home Builder Confidence Continued to Rise in September

The latest builder index is consistent with the NAHB’s forecast for the US housing market to recover at a steady, modest pace this year. The index has not been below 50 since June 2014.

The NAHB/Wells Fargo Housing Market Index, derived from a monthly survey, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good”, “fair”, or “poor”. Readings greater than 50 mean more respondents report good market conditions.

Lenders like The Federal Savings Bank were pleased to find out that builder confidence continued to rise for the second consecutive month in September.

“NAHB is projecting about 1.1 million total housing starts this year”, said NAHB Chief Economist David Crowe. “However, our members continue to tell us that they are concerned about the availability of lots and labor”.

Historically low interest rates and rising rents have made a home purchase more appealing for those who can afford a down payment, but housing prices have also risen in much of the country. Although job growth has been steady over the past five years, wages have stayed relatively flat, making it harder for people to save for a home.

The index from the National Association of Homebuilders came in at 62 for September. The premium for new construction compared to existing homes is now wider than usual.

Of its three components, current sales conditions rose one point to 67, but sales expectations over the next six months fell two points to 68. A measure of traffic from prospective buyers rose two points to 47.

In the NAHB’s four regions, the three-month moving average index rose in the South rose from 63 to 64 in September and by a like amount to 64 in the West and to 59 in the Midwest.