Builders' confidence in the market for new single-family homes gained as the National Association of Home Builders' housing market index — a monthly gauge of builder sentiment — rose to 59 in August from a revised 56 in July, originally reported as 57.
Thomson Reuters' poll of economists predicted the index would dip to 56.
"Builders are seeing more motivated buyers walk through their doors than they have in quite some time," according to NAHB Chairman Rick Judson. "What's more, firming home prices and thinning inventories of homes for sale are contributing to an increased sense of urgency among those who are in the market."
"Builder confidence continues to strengthen along with rising demand for a limited supply of new and existing homes in most local markets," said NAHB Chief Economist David Crowe. "However, this positive momentum is being slowed by the ongoing headwinds of tight credit and low supplies of finished lots and labor."
Derived from a monthly survey that NAHB has been conducting for 25 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 rose to 62 from 59, the sales expectations index for the next six months gained to 68 from 67; and the traffic of prospective buyers index remained at 45.