American home builders’ confidence bounced back in August, thanks to rising demand for new single-family homes, according to a report released today by the National Association of Home Builders (NAHB).
Overall home builder confidence in the new single-family home market rose four percentage points in August to a level of 68 on the NAHB and Wells Fargo Housing Market Index (HMI).
“Builders continue to be encouraged by rising demand in the new-home market,” says NAHB Chairman Granger MacDonald, a homebuilder in Texas, in a press release.
August’s spike in confidence was spurred by ongoing job and economic growth, low mortgage rates, and rising consumer confidence, says NAHB. This was in line with NAHB’s forecasted “gradual strengthening in the housing market.”
“GDP growth improved in the second quarter, which helped sustain housing demand,” says Robert Dietz, NAHB’s Chief Economist, in a release.
Gross Domestic Product (GDP) is the best indicator of a country’s economic performance. It measures the value of all goods and services produced within a country over time.
The HMI is derived from a monthly survey conducted by NAHB to gauge builder perception of current and future single-family home sales, and homebuyer foot traffic. Scores for each component of the HMI are used to calculate a seasonally adjusted index where any number over 50 indicates that more homebuilders view conditions as “good” rather than “poor.”
All three of the components that comprise the HMI posted gains in August: current sales conditions rose four points to 74, future sales rose five points to 78, and homebuyer traffic rose one point to 49.
Over the last three months, the HMI average for the Northeast rose one point to 48, while the West, the South and Midwest all were unchanged at 75, 67 and 66, respectively.
But while confidence was on the rise, American homebuilders continue to struggle with a shortage of labor and available lots — two factors that are unlikely to change in the coming months.
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