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Builder Confidence Increases in August to 59, Highest in Almost Eight Years

by Bill McBride

The National Association of Home Builders (NAHB) reported the Housing Market Index (HMI) increased 3 points in August to 59. Any number above 50 indicates that more builders view sales conditions as good than poor.

The NAHB posted the following information on its website:

Builder confidence in the market for newly built, single-family homes rose three points to 59 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for August, released today. This fourth consecutive monthly gain brings the index to its highest level in nearly eight years.

“Builder confidence continues to strengthen, along with rising demand for a limited supply of new and existing homes in most local markets,” noted NAHB Chief Economist David Crowe. “However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor.”

Two of the HMI’s three components posted gains in August. The component gauging current sales conditions rose three points to 62, while the component gauging sales expectations in the next six months gained a single point to 68 and the component gauging traffic of prospective buyers held unchanged at 45.

All but one region saw a gain in its three-month moving average HMI score in August. The Midwest and West each posted six-point increases, to 60 and 57, respectively, while the South posted a four-point gain to 54 and the Northeast held unchanged at 39.

The graph compares the NAHB HMI with single-family housing starts. This includes the August release for the HMI and the June data for starts. This was above the consensus estimate of a reading of 57.

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