Builders are as Confident Now as They Were During the Housing Boom in 2005

It’s been ten years since a widely followed index measuring market confidence among home builders has registered a mark this high.
The U.S. homebuilders’s index climbed in October to a 10-year high. That means builders see solid business over the next six months, or longer.

The National Association of Home Builders/Wells Fargo gauge increased to 64 this month, the highest since October 2005, from 61 in September, the NAHB reported Monday. Readings above 50 mean more respondents said conditions were positive, versus negative.
A strengthening labor market and mortgage rates still at historic lows, hovering at about 4 percent, are contributing to higher demand for new homes.
However, there are negative factors to consider. Builders complain of “pockets of softness in some markets” and they “face challenges regarding the availability of lots and labor,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.
Overall, though, the market is looking healthy. Two of the three index components posted gains in October. The index measuring sales expectations in the next six months rose seven points to 75, and the component gauging current sales conditions increased three points to 70. Meanwhile, the index charting buyer traffic held steady at 47.
“With October’s three-point uptick, builder confidence has been holding steady or increasing for five straight months. This upward momentum shows that our industry is strengthening at a gradual but consistent pace,” said NAHB Chief Economist David Crowe. “With firm job creation, economic growth and the release of pent-up demand, we expect housing to keep moving forward as we start to close out 2015.”

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