Builder confidence in the U.S. market for newly built, single-family homes rose one point in August to its highest level in more than a year, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Building on a two-point gain in July, the HMI reached 18 this month, its highest point since June of 2008.
"One very positive aspect of today's report is the big gain registered in the component gauging home builders' expectations for the next six months," noted NAHB Chief Economist David Crowe. "This reflects anticipated sales stemming from the tax credit as well as recent signs that an economic recovery has begun. There is definitely a sense of hope among builders that the worst of the downturn is over and that a turning point is near at hand. Meaningful action by Congress could ensure that this upward momentum continues and that housing can help push the economy back onto solid ground."
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 sales conditions as good than poor.
Two out of three of the HMI's component indexes recorded substantial gains in August. The biggest boost, of 4 points, was registered by the index gauging sales expectations in the next six months, which rose to 30 this month. Meanwhile, the index gauging traffic of prospective buyers gained three points to 16 and the index gauging current sales conditions held unchanged at 16.
Regionally, all but the South recorded HMI gains in August. The Northeast posted an 8-point gain to 24, the Midwest posted a two-point gain to 16, the West posted a three-point gain to 17 and the South posted a one-point decline to 18.
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