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December 2014

Builders Upbeat for 5th Straight Month

December 2014 - NWREporter


Builder confidence in the market for newly-built single family homes rose above the 50-point benchmark in November, marking the fifth consecutive month of positive outlooks. Homebuilders expect the momentum to continue in 2015.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) showed a four-point improvement from October, rising from 54 to 58. A number over 50 indicates that more builders view conditions as good than poor.

A comparison by regions shows the West, with an HMI of 60, lagged only the South (62).
The HMI posted a nine-year high in September.

"Growing confidence among consumers is what's fueling this optimism among builders," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. "Members in many areas of the country continue to see increasing buyer traffic and signed contracts."

"Low interest rates, affordable home prices and solid job creation are contributing to a steady housing recovery," said NAHB Chief Economist David Crowe. Pent up demand is also credited with sustaining the builders' expectations for continued growth.

The Index gauges builder perceptions of current single-family home sales and sales expectations for the next sixth months as "good," "fair" or "poor." Derived from monthly surveys, the HMI also reflects builders' ratings of traffic of prospective buyers. Scores from each component are used to calculate a seasonally adjusted index, with any number above 50 indicating a favorable outlook.

All three HMI components increased in November. The index gauging current sales conditions rose five points to 62, while the index measuring expectations for future sales moved up two points to 66 and the index gauging traffic of prospective buyers increased four points to 45.