Home Builders Remain Optimistic Despite Market Stumbles

New home sales declines and a weak jobs report in September may have some a bit skeptical about the future of the housing market, but despite September's stumbles, home builders maintain their market confidence.

The National Association of Home Builders' (NAHB) Eye on the Economy biweekly survey of their economic and housing analysis by Chief Economist David Crowe showed new home sales contracts fell 11.5 percent from 529,000 in August to 468,000 in September and job numbers were weak. However, home builders are exuding unwavering confidence in the market.

Homebuilders' confidence in the market for newly constructed single-family homes rose in October, returning to a level not seen since the end of the housing boom in 2005.

According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder confidence increased three points to 64 in October. Any value over 50 means builders see more improvement in the housing market than damage.

NAHB Chairman and a home builder from Blue Springs, Missouri Tom Woods noted that the single-family housing market is "making lasting gains as more serious buyers come forward" as builder confidence has floated above the 60s since June.

“With October’s three-point uptick, builder confidence has been holding steady or increasing for five straight months, " Crowe said. "This upward momentum shows that our industry is strengthening at a gradual but consistent pace. With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015."

Although housing starts rose 6.5 percent to an eight-year high of 1.206 million units in September, the increase was all in the multifamily sector, according a report from the U.S. Census Bureau and HUD.

The report showed that in September, single-family housing starts reached a rate of 740,000, up 0.3 percent from the revised August figure of 738,000.

Crowe noted that the rise in starts "provide a clearer picture of the steady increase in housing construction that we have been experiencing for several years."

National Association of Federal Credit Unions Chief Economist Curt Long said that the housing starts is "encouraging, but reconfirms that much of the recent strength in the market is focused in the multifamily segment. This speaks to the inability of many potential borrowers to afford to purchase housing due to high prices, steep down payment requirements and tight inventory."

The NAHB reported that worker access is a supply headwind that is pushing against sector growth as the number of jobs in home building and remodeling  increased by only 3,900 positions on a seasonally adjusted basis,  according to the Bureau of Labor Statistics.

Industry hiring has also slowed in 2015, with the average monthly employment gain at just over 5,500 over the last six months, but as hiring has slowed, construction jobs rose.