Home Builder Confidence Level Reaches Highest Rate Since 2006
Home builder confidence has more than doubled from a year ago and is the highest in more than six years, another sign that the housing recovery appears to have taken hold.
The National Association of Home Builder's Index increased to 46 this month, up from 41 in October. That’s the highest reading since May 2006 – just before the housing bubble burst.
“While our confidence gauge has yet to breach the 50 mark – at which point an equal number of builders view sales conditions as good versus poor – we have certainly made substantial progress since this time last year, when the HMI stood at 19,” observed NAHB Chief Economist David Crowe. “At this point, difficult appraisals and tight lending conditions for builders and buyers remain limiting factors for the burgeoning housing recovery, along with shortages of buildable lots that have begun popping up in certain markets.”
Two out of three of the association’s component indexes registered gains in November. The component gauging current sales conditions posted the biggest increase, with an eight-point gain to 49 – its highest mark in more than six years.
Meanwhile, the component measuring sales expectations for the next six months held above 50 for a third consecutive month with a two-point gain to 53, and the component measuring traffic of prospective buyers held unchanged at 35 following a five-point gain in the previous month.
Broken down by region, the survey of home builders in the South showed a four-point gain to 43.
The highest builder confidence in the nation was in the West, with 47, while the lowest was in the Northeast with 31.
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