The US housing market continues to bounce back with the National Home Builders Association (NHBA) reporting builder confidence reaching levels not seen since November 2005. Released Thursday, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) put the confidence level in the market for newly built, single-family homes in July at 60. Newly revised data also boosted the HMI for June up to 60 as well.
The index is based on a monthly survey conducted by NAHB that asks builders for their perceptions of current single-family home sales, sales expectations for the next six months as well as asking them to rate traffic of prospective buyers. Scores are used to calculate the seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. In July, confidence in sales expectations for the next six months ran particularly high.
The lowest confidence level recorded by the 30-year old index was in January 2009 in the throes on the Great Recession. The HMI peaked in December 1998. Since July of last year, the HMI has remained above 50 and the NAHB believes builder confidence reflects recent reports about an improving job market and strong home sales.
“As we head into the second half of 2015, we should expect a continued recovery of the housing market,” said NAHB Chairman Tom Woods.
Looking at the three-month moving averages for regional HMI scores, confidence was highest in the South, which saw an HMI level of 61. It was followed by the West at 60 and the Midwest at 55. The only region to see the three-month moving average fall below 50 was the Northeast which recorded a confidence level of 47, though that it did see an increase of three points.
Though the index suggests better days ahead for the US housing market, NAHB Chief Economist David Crowe did say there were still a number of challenges, including shortages of lots and labor.