By Peter Ricci
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) posted notable gains in July, rising six points to its highest level since March of 2007.
The six-point increase is the largest one-month gain for the HMI in nearly a decade, and the gains were universal – confidence levels in every region in the U.S. rose, with the Midwest increasing three points to 34 and the South five points to 32.
Barry Rutenberg, the chairman of the NAHB, said the widespread nature of the HMI’s gains suggest good things for construction’s future.
“Builder confidence increased by solid margins in every region of the country in July as views of current sales conditions, prospects for future sales and traffic of prospective buyers all improved,” Rutenberg said. “This is greater evidence that the housing market has turned the corner as more buyers perceive the benefits of purchasing a newly built home while interest rates and prices are so favorable.”
Brian Brunhofer, the president of Deerfield-based Meritus Homes, said that within the last month, he’s witnessed the same kind of activity Rutenberg described.
“Over the last 30 days, we’ve seen significantly more activity from consumers and Realtors,” Brunhofer said. “Across the board, interest is up.”
Brunhofer added that though construction, like real estate, is very local (and some communities will perform better than others), there is definitely more stability in the entire Chicagoland market. Regarding specific markets, he said that communities with tear-down lots, such as Western Springs, Naperville, Hinsdale and the North Shore, have been high levels of activity, with many of the properties receiving multiple offers. And though its still early, builders are beginning to talk more about land acquisitions in anticipation of new buyer demand.
And new data from the Census Bureau supports both Brunhofer and Rutenberg’s perspectives. For June, building permits were up 19.3 percent year-over-year, housing starts 23.6 percent and housing completions 7.2 percent.
As Bill McBride pointed out on Calculated Risk, housing starts performed above analyst expectations and are now 59 percent higher from the bottom.
“This is another fairly strong housing report,” he wrote.