The National Association of Home Builders/Wells Fargo Housing Market Index, which gauges builder perception of current single-family home sales an expectations for sales over the next six months, hit a level of 60 in July, while June’s index was upwardly revised to 60 as well. The HMI hasn’t been at 60 since November of 2005.
The index is derived from a survey that the NAHB has conducted for 30 years. Index readings above 50 mean that more builders view market conditions as good than poor.
“The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace,” said NAHB Chairman Tom Woods. “As we head into the second half of 2015, we should expect a continued recovery of the housing market.”
“This month’s reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth,” said NAHB Chief Economist David Crowe. “However, builders still face a number of challenges, including shortages of lots and labor.”
Two of the HMI’s three components saw gains this month. The component that gauges builders’ perceptions of current sales conditions rose a point to 66, while that charting 6-month sales expectations jumped two points to 71. The component measuring buyer traffic fell a point to 43.
Regionally, the HMI scores for the West and Northeast each saw three-point gains, to 60 and 47, respectively. The South and Midwest, meanwhile, each posted one-point gains to 61 and 55.
Builder confidence in the U.S. housing market has hit its highest level in nearly a decade, according to data released Thursday.