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 55 in August from 53 in July.
Thomson Reuters' poll of economists predicted the index would be 53.
"As the employment picture brightens, builders are seeing a noticeable increase in the number of serious buyers entering the market," NAHB Chairman Kevin Kelly said. "However, builders still face a number of challenges, including tight credit conditions for borrowers and shortages of finished lots and labor."
"Each of the three components of the HMI registered consecutive gains for the past three months, which is a positive sign that builder confidence appears to be firming following an uneven spring," according to NAHB Chief Economist David Crowe. "Factors contributing to this rise include sustained job growth, historically low mortgage rates and affordable home prices, which are helping to unleash pent-up demand."
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 58 from 56, the sales expectations index for the next six months climbed to 65 from 63; and the traffic of prospective buyers index rose to 42 from 39.
