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Confidence Level of Homebuilders Rises 09-01-16 | News
Confidence Level of Homebuilders Rises
August HMI Increases Two Points to 60


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The Housing Market Index climbed to 60 in August, from 58 in July, a sign that homebuilders are confident new single-family homes are selling well at the moment, and that the upward trend will continue over the next six months.


The National Association of Home Builders' Housing Market Index rose a full two points to 60 in August, compared to July, a sign that most homebuilders are optimistic about current and future market conditions.

Each month, the NAHB surveys homebuilders and asks them for their opinions on current single-family home sales and sales over the next six months. Builders are also asked to rate the traffic of prospective buyers.

Aggregate HMI scores of 50 or higher mean more builders view conditions as positive than negative.

"New construction and new home sales are on the rise in most areas of the country, and this is helping to boost builder sentiment," said Ed Brady, chairman of the NAHB.

On a regional basis, the Midwest dropped two points to 55; the Northeast and the South each increased two points to 41 and 63, respectively; and the West was unchanged at 69.

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The NAHB also reports that its 55+ Single-Family Housing Market Index moved up one point to 57 in the second quarter, compared to the first quarter. This is the ninth straight quarter that the Single-Family HMI has been above 50 and in positive territory.

The NAHB maintains separate 55+ HMIs for the single-family and multifamily markets, but uses the same process to compile both quarterly indexes as well as its monthly HMI.

"Builders and developers for the 55+ housing sector continue to report steady demand," said Jim Chapman, chairman of the NAHB's 55+ Housing Industry Council. "However, there are many places around the country facing labor and lot shortages, which are hindering production."

The NAHB's 55+ Multifamily HMI dipped one point to 47 in the second quarter, compared to the first quarter.

Architecture Billings Dip Slightly in July
Even though the Architecture Billings Index dropped slightly in July, it has nonetheless been in positive territory for 10 of the last 12 months, including the last six in a row, said the American Institute of Architects.

The ABI dipped a little more than a point to 51.5, down from 52.6 in June. However, it still reflects an increase in design services, as any reading above 50 indicates an increase in billings.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine to 12 month lead-time between architecture billings and construction spending.

The ABI is derived from surveys. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month.

The AIA also maintains the new projects inquiry index, which dropped to 57.5 from a reading of 58.6 in June.

Kermit Baker, chief economist for the AIA, said: "The uncertainty surrounding the presidential election is causing some funding decisions regarding larger construction projects to be delayed or put on hold for the time being. It's likely that these concerns will persist up until the election, and therefore we would expect higher levels of volatility in the design and construction sector in the months ahead."

Regional averages: Midwest, 50.1; Northeast, 49.3; South, 56.9; West, 49.2.

"The Midwest rebounded in July, rising 1.9 points to 50.1, and has returned to expansion territory," the Wells Fargo Economics Group said. "The South posted its sixth monthly increase and is at 56.9, the strongest reading since November 2014. The Northeast and the West registered billing declines during the month, both falling into contraction territory for the second time this year. This, however, is more than likely transitory and not a start of a trend, as below-50 readings have not been lasting for these two regions."







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