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Builder Confidence Escalates07-21-15 | News

Builder Confidence Escalates

The Housing Market Index (HMI) for July reached a level not seen in close to 10 years, and suggests the recovery of the single-family housing market is well underway.

Not since November 2005 have homebuilders been so bullish about the single-family market, according to an organization that tracks builder confidence and housing trends.

The National Association of Home Builders said its July Housing Market Index (HMI), a survey of homebuilders, hit a level of 60, and that its June survey was previously at 59 but has been upgraded to 60 as well.

Any number above 50 shows more builders consider housing conditions to be good rather than poor.

"The fact that builder confidence has returned to levels not seen since 2005 shows that housing continues to improve at a steady pace," said NAHB Chairman Tom Woods, a homebuilder from Blue Springs, Mo.

Woods said he expects the housing market to continue its recovery with an even stronger second half of 2015.

"This month's reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth," David Crowe, chief economist for the NAHB, said.

However, they will continue to face obstacles, most notably in shortages of lots to develop and labor to build more homes. The NAHB has been conducting its monthly survey for 30 years, as builders are asked to evaluate both current single-family home sales and sales expectations for the next six months, among other questions. Scores for each component are then used to calculate a seasonally adjusted HMI.

The component that asks builders about current sales conditions rose one point to 66, and the component that gauges sales expectations over the next six months increased two points to 71, according to the NAHB.

On a regional basis, the West and Northeast each rose three points to 60 and 47, respectively. The South gained one point to 61, and the Midwest increased one point to 55.