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After a reaching levels not seen since November 2005 in August, builder confidence for newly constructed single-family homes continued to climb in September with a one point increase to a level of 62.
The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) determined that this reading is the highest since October 2005.
However, even as confidence increases, there are still concerns with lot and labor availability.
"Builders continue to express confidence that the slow single-family housing recovery will continue, but they are concerned most about their ability to buy lots at affordable prices that enable them to ultimately produce a home that will sell,” said David Crowe, NAHB’s chief economist. “Lot prices have increased in many markets to the point where the final sales price of the home would not be affordable to prospective buyers or competitive against existing homes.
He added, “Following the concern about lots were concerns about hiring qualified construction workers and the regulatory regimes that have cropped up to delay construction and raise the cost of the final product.”
The NAHB/Wells Fargo Housing Market 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.” Any number over 50 indicates that more builders view conditions as good than poor.
In September, the NAHB reported that two of the three HMI components posted gains.
The component that measures buyer traffic increased two points to 47, and the component that measures current sales conditions rose one point to 67. On the other hand, the index that graphs sales expectations dropped from 70 to 68.
In terms of three-month moving average regional HMI scores, the West and Midwest each rose one point to 64 and 59, respectively. The South gained one point to reach 64 and the Northeast dropped one point to 46.
"NAHB is projecting about 1.1 million total housing starts this year,” said David Crowe, NAHB’s chief economist. “Today's report is consistent with our forecast, and barring any unexpected jolts, we expect housing to keep moving forward at a steady, modest rate through the end of the year.”
