Builder confidence in the market for newly built, single-family homes in September jumped six points to 65 from a downwardly revised August reading of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today. This marks the highest HMI level since October 2015. It is also the largest monthly increase over the past year, according to Wells Fargo Securities.
“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” said National Association of Home Builders (NAHB) Chairman Ed Brady, a home builder and developer from Bloomington, IL. “The single-family market continues to make gradual gains, and we expect this upward momentum will build throughout the remainder of the year and into 2017.”
“With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them,” said NAHB Chief Economist Robert Dietz. “Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots.”
All three HMI components moved higher in September. The component measuring current sales expectations rose six points to 71 and the gauge charting sales expectations in the next six months increased five points to also stand at 71. The index measuring traffic of prospective buyers posted a four-point gain to 48.
The three-month moving averages for HMI scores posted gains in three out of the four regions. The Northeast and South each registered a one-point gain to 42 and 64, respectively, while the West rose four points to 73. In September alone, the West surged 14 points to 82, the series’ highest reading since 2005, according to Wells Fargo Securities. The Midwest was unchanged at 55.
