Builder Confidence Reaches 12 Year High

April 2017

According to the National Association of Home Builders and Wells Fargo Housing Market Index (HMI) builder confidence in the market for newly build single-family homes jumped six points to a level of 71. This is the highest builder confidence reading since June 2005.

The HMI benefited from unseasonably warm weather at the start of 2017 which improved demand and construction conditions. While builders are extremely confident, there is expected to be some restraint moving forward. There are challenges that they continue to face including shortages of lots and labor, increasing mortgage rates and rising material prices.

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of 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 for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

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