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Builder Confidence Remains Strong

Builders remained confident about the strength of the housing market and the growth of consumer demand in the housing market according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) for February.

The monthly survey gauges builder perceptions of current single-family home sales and sales expectations for the next six months. Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor. The index for February remained unchanged at 72, a post-recession high, according to the NAHB.

“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.”

The HMI component for sales expectations over the next six months rose two points to 80, while the index measuring traffic for prospective buyers 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,” said Robert Dietz, Chief Economist at NAHB. “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.”

Regionally, the three-month average moving HMI for the Midwest rose two points to 72, the South increased one point to 74 and the West remained unchanged at 81. The Northeast was the only region to show a decline in the index falling two points to 56 for this region.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at [email protected].
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