Builder Confidence Rises to Highest Level in 9 Years

by Peter Thomas Ricci

Builder confidence has continued its recovery in September, according to new NAHB research.


Homebuilders are clearly a happy bunch.

According to the National Association of Home Builders’ latest Housing Market Index, which is the leading measure of confidence in the market for single-family family home construction, builder confidence rose four points to a level of 59 in September; any index reading above 50 indicates that more builders see market conditions as good than as bad.

That’s the fourth consecutive month of increases for builder confidence, which is now at its highest level since Nov. 2005.

“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.

Uniform Gains in September

What is so encouraging about September’s Housing Market Index is its uniformity. The index is divided into three components, each one covering a different aspect of the new construction marketplace. In September, all three were positive: the indices gauging current sales conditions and traffic of prospective buyers each rose five points to 63 and 47, respectively; meanwhile, the index gauging expectations for future sales increased two points to 67.

The index was also coincident geographically: the Midwest registered a five-point gain to 59; the South posted a four-point increase to 56; the Northeast recorded a three-point gain to 41; and the West posted a two-point increase to 58.

A Sign of Things to Come?

The last four months, builder confidence has been something of a mystery. Though the Housing Market Index has risen steadily throughout the summer, the actual new construction numbers coming from the Census Bureau were underwhelming, and failed to puncture through the many market conditions that continue to hold homebuilding back; some analysis have posited that builders knew something we didn’t, and that unseen market stats would eventually manifest and give credence to confidence levels.

New housing starts data is due out tomorrow, so we shall see!

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