Real Estate

Builder confidence in future sales expectations reaches post-recession high

Overall confidence remains steady in February

Builder confidence remained high in February, and their confidence in future sales expectations even reached a post-recession high, according to the National Association of Home Builders and Wells Fargo Housing Market Index.

Builder confidence remained unchanged at its high level of 72 in February, the HMI showed. However, January’s HMI shows this is a slight dip from its December level of 74, an 18-year high.

“Builders are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth,” said NAHB Chairman Randy Noel. “However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as good, fair or poor.

The survey also asks builders to rate traffic of prospective buyers as high to very high, average or low to very low. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates most homebuilders view conditions as good rather than poor.

The HMI component charting sales expectations in the next six months increased two points to 80, a post-recession high, as the index measuring buyer traffic held steady at 54. The component gauging current sales conditions dropped one point to 78.

“The HMI gauge of future sales expectations has reached a post-recession high, an indicator that consumer demand for housing should grow in the months ahead,” NAHB Chief Economist Robert Dietz said. “With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.”

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