Builders' confidence in the market for new single-family homes grew as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — climbed to 59 in September from 55 in August.
The index has not been this high since November 2005.
Thomson Reuters' poll of economists predicted the index would be 56.
"Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction," NAHB Chairman Kevin Kelly said.
"While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not seeing much activity from millennials and first-time home buyers," according to NAHB Chief Economist David Crowe. "Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots and labor."
Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.
The current single-family home sales index gained to 63 from 58, the sales expectations index for the next six months climbed to 67 from 65; and the traffic of prospective buyers index rose to 47 from 42.
