Builder Confidence Rises Above Key Benchmark

Builders are gaining confidence in the new single-family home market, with the National Association of Home Builders/Wells Fargo Housing Market Index reaching an important milestone this month. The index rose four points to reach 53 in July. Any reading above 50 indicates more builders view sales conditions as good than poor.

“This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace,” says NAHB Chairman Kevin Kelly.

An improving job market is helping to boost builders’ confidence, says David Crowe, NAHB chief economist. “As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home,” Crowe says.

The index gauges builder perceptions of current single-family home sales, expectations for the next six months, as well as buyer traffic. All three components posted gains in July, with expectations for future sales rising six points to 64; current sales conditions rising four points to 57; and the gauge for buyer traffic rising three points to 39.

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