According to a report by the National Association of Home Builders the confidence in the market of single-family homes increased to a level of 74. The reading marks the highest level of builder confidence since July of 1999. A reading of 50 marks the demarcation line of whether builder’s sentiment is either positive or negative. The sentiment grew 5 points from last month and 5 points overall year over year.
Some of the factors that has helped with homebuilder sentiment is the improving economy and the removal of regulations by the government.
“Housing market conditions are improving partially because of new policies aimed at providing regulatory relief to the business community,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
According to the NAHB the monthly survey was derived from a monthly that the NAHB has been conducting for 30 years. The NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for 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. Three factors that have increased is that buyer traffic jumped 8 points to 58. Also, current sales conditions rose 4 points to 81 and the expectation of sales for the next six months increased 3 points to 79. One of the main deterrence to increased sales would be inventory and there still remain shortages in housing nationwide.
“With low unemployment rates, favorable demographics and a tight supply of existing home inventory, we can expect continued upward movement of the single-family construction sector next year,” said NAHB Chief Economist Robert Dietz.
Of significance for us in New York City is that builder confidence inched up 1 point in the Northeast according to the new survey.
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