Builder confidence in the market for new single-family homes rose to a level of 59 on the National Association of Home Builders/Wells Fargo Housing Market Index – the highest level since November of 2005. The index, which surveys builder attitudes, is keyed to 100; any number above 50 indicates that more builders are optimistic about the market than pessimistic.
“Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction,” said NAHB Chairman Kevin Kelly.
There are still reasons for concern however, according to NAHB chief economist David Crowe.
“While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not seeing much activity from first-time home buyers,” Crowe said. “Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor.”
Still, builder confidence is up in every region of the country. The Midwest saw a five-point gain, with confidence rising to 59. The South posted a four-point increase to 56, and the West saw a two-point gain, bringing builder confidence there to 56. The Northeast also saw a gain, but more builders are pessimistic about the market there than otherwise; even with a three-point increase, confidence among builders in the Northeast was only at 41.
Home builder confidence has hit its highest level in nearly nine years after four consecutive months of gains.