Builder confidence in the new-home market rose to its highest reading in nearly 9 years, according to the latest reading from the National Association of Home Builders/Wells Fargo Housing Market Index. September marked the fourth consecutive month that builder confidence has been on the rise.
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"Since early summer, builders in many markets across the nation have been reporting that buyer interest and traffic have picked up, which is a positive sign that the housing market is moving in the right direction," says NAHB Chairman Kevin Kelly.
For the new-home market, builder confidence rose to a level of 59 in September, according to the index. Any reading above 50 indicates that more builders view conditions as "good" than "poor."
The seasonally adjusted index measures builder perceptions of the single-family new-home market on home sales and sales expectations for the next six months, as well as builders' perceptions of buyer traffic. All three of the index components in September posted gains, with current sales conditions and traffic of prospective buyers rising to 63 and 47, respectively. Expectations for future sales also rose two points to 67.
Builder confidence also rose across every region, with the Midwest posting the largest gain in September, followed by the South.
While builder confidence is up overall, builders are noting that one segment of buyers is notably missing from the market.
"While a firming job market is helping to unleash pent-up demand for new homes and contributing to a gradual, upward trend in builder confidence, we are still not seeing much activity from first-time home buyers," says NAHB Chief Economist David Crowe.
"Other factors impeding the pace of the housing recovery include persistently tight credit conditions for consumers and rising costs for materials, lots, and labor."