Washington, DC, Aug. 18--Builder confidence in the market for new single-family homes surged in August as home buyers rushed to lock in mortgage rates at attractive levels and signs of improving economic conditions heartened builder expectations for the next six months, according to the National Association of Home Builders’ August Housing Market Index (HMI), released today. The index gained six points from the previous month to a 71 reading, its highest level since January of 2000.
"Builders are still optimistic about current and expected home sales. Buyers appear to be motivated to make a purchase now, while rates remain near historic lows," said NAHB President Kent Conine, a home and apartment builder from Dallas.
"Looking ahead, builders are optimistic that this strong level of activity can be sustained as the economy starts picking up steam," added NAHB Chief Economist David Seiders.
The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home Builders are asked to rate current sales of single-family homes and sales expectations for the next six months as "good," "fair" or "poor." They are also asked to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for responses to each component are used to calculate a seasonally adjusted index, where any number over 50 indicates that more builders view sales conditions as good than poor.
All of the component indexes registered substantial gains in August. The index gauging current sales activity rose by the greatest margin--eight points--to 77, its highest level since February of 2000. The index gauging sales expectations for the next six months rose four points to 78, its highest level since December of 1999, and the index gauging traffic of prospective buyers also gained four points, to 55--its highest level since July of 1999.
