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Housing Market Index Surges in September10-12-16 | News

Housing Market Index Surges in September
HMI At Its Highest Level Since October 2015

The National Association of Home Builders said single-family home developers are seeing widespread heightened interest from prospective buyers, and their sentiments are reflected in the Housing Market Index for the month of September.

A nationwide index that gauges the market for new single-family homes surged upward in September and is now at its highest level since October 2015.

The National Association of Home Builders reports that its Housing Market Index, derived each month from surveys of developers of single-family homes, jumped six points in September to a reading of 65.

"As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward," said Ed Brady, chairman of the NAHB. "The single-family market continues to make gradual gains, and we expect this upward momentum will build throughout the remainder of the year and into 2017."

In each survey, builders are asked to rate 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."

Scores from each component are then used to calculate the HMI. Any number above 50 means more builders view conditions as good, while scores below 50 would indicate the opposite.

September's six-point rise was broad based, as all three HMI components spiked higher.

On a regional basis, the West registered the biggest increase with a gain of four points. The Northeast and South each improved one point to 42 and 64, respectively. The Midwest remained unchanged at 55.

"With the inventory of new and existing homes remaining tight, builders are confident that if they can build more homes they can sell them," said Robert Dietz, NAHB chief economist. "Though solid job creation and low interest rates are also fueling demand, builders continue to be hampered by supply-side constraints that include shortages of labor and lots."

Worker Shortages Continue To Plague Builders
Employment in the construction industry increased in 220 metro areas from August 2015 to the same month in 2016, but it was smallest share-gain in over three years, the Associated General Contractors said.

The data makes it clear that contractors and construction industry employers are having a hard time finding qualified workers, the AGC said. It also points to the need for more building trades-oriented programs in high schools as a way of beefing up the construction workforce.

While construction employment increased in 61 percent of the 358 metro areas in the past year, it held steady in 62 areas, and declined in 76 others.

"Many firms would be hiring more people if only they could find qualified applicants to bring onboard," said Stephen E. Sandherr, chief executive officer for the ACG, who urged the Senate to act quickly on a House-passed measure to reform and boost funding for career and technical education programs. "Making it easier for school officials to offer programs that prepare students for high-paying careers in construction will certainly help overcome chronic workforce shortages in the industry."

Denver-Aurora-Lakewood, Colo., added the most construction jobs during the past year (11,400 jobs, 12 percent); followed by Anaheim-Santa Ana-Irvine, Calif. (10,200 jobs, 11 percent); and Orlando-Kissimmee-Sanford, Fla. (10,200 jobs, 17 percent).

The areas with the largest job losses from August 2015 to August 2016:
Houston-Woodlands-Sugar Land, Texas (-3,700 jobs, -2 percent); followed by Birmingham-Hoover, Ala. (-1,500 jobs, -6 percent); and Louisville-Jefferson County, Ky. (-1,400 jobs, -5 percent).