It’s been 7 years since the National Association of Home Builders/Wells Fargo Housing Market Index has hovered above an index score of 50.
But that feat was finally accomplished on Monday with NAHB noting a new builder confidence index score of 52 for single-family homes – an eight point increase from the previous report.
A reading above 50 is considered a market where more builders view sales conditions as ‘good’ than ‘poor.’
The last time builders reached an index score above 50 was April 2006 right before the housing bubble popped.
“With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes,” said NAHB Chairman Rick Judson, a home builder and developer.
“The eight-point jump in the index was the biggest one-month gain since August and September of 2002, when the HMI recorded a similar increase of eight points.”
NAHB’s Chief Economist David Crowe says the steep jump is in line with estimates that builders would experience a 29% jump in total housing starts this year, making it potentially the first time since 2007 that starts topped the one-million mark.
All components of the index – the current sales conditions index, the measuring expectations for future sales index and the traffic of prospective buyers index rose.
The index gauging sales grew 8 points to an index score of 56, while the index for future sales expectations soared nine points to 61.
The traffic index for prospective buyers rose seven points to 40, which is still under 50, but an improvement.