Home Builder Confidence Jumps Four Months

By Ryan Jackson
Home builder confidence jumped for the fourth straight month in August, according to the National Association of Home Builders. The new home construction two point gain builds on a six point jump in July to bring the index to the highest level since February 2007, close to the peak of the housing market collapse.

“Current sales conditions, sales prospects for the next six months and traffic of prospective buyers are all better than they have been in more than five years,” said Barry Rutenberg, chairman of the National Association of Home Builders. “While there is still much room for improvement, we have come a long way from the depths of the recession.”

A variety of U.S. housing markets have seen improvements since the beginning of the year, including many areas of the country which have sustained the hardest impacts. More than 85 U.S. cities are now forecast to experience housing appreciation by Housing Predictor analysts through the end of the year.

“However, we are still at a very fragile stage of this process,” said NAHB chief economist David Crowe. ”And builders continue to express frustration regarding the inventory of distressed properties, inaccurate appraisal values, and the difficulty of accessing credit for both building and buying homes.”

The new home builders’ index has been gauging builder perceptions of current single family home sales and sales expectations for 25 years. The survey asks builders to rate market conditions the next six months as “good,” “fair” or “poor.”

The national study also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Every component posted gains in August. The components gauging current sales conditions and traffic of prospective buyers each rose three points, to 39 and 31, respectively. Sales expectations in the next six months inched up one point to 44. All were at their highest levels in more than five years.