A report released on June 16 noted that builder confidence within the market for newly built, single-family homes has recently rose four points – up to a level of 49 on the National Association of Home Builders (NAHB) /Wells Fargo Housing Market Index (HMI).
"After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Del. "However, builders are [still] facing strong headwinds, including the limited availability of labor."
The HMI Index is based on a monthly survey that has been initiated by NAHB for the past 30 years. The survey asks builders to rate their home sales expectations for the next six months, based on a "good", "fair" or "poor" ranking. Additionally, builders rate traffic of prospective buyers as "high to very high", "average" or "low to very low." The rankings are then used to calculate an index amount, in which any number over 50 indicates that the majority of builders view conditions as good as opposed to fair.
The recent overall HMI index number is just one point shy of 50, signaling that there definitely has been an upswing within the past year, as more Americans are feeling economically confident and stable enough to purchase a new property. Individually, the indexes for current sales conditions as well as sales expectations for the next six months both were 54 and 59 respectively, providing good news for builders.
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