WASHINGTON – The housing market continues to show signs of strengthening as builder confidence for new single-family homes rose slightly for the sixth consecutive month in October. According to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released Oct. 16, the 1-point gain brings the index to 41, its strongest level since June of 2006.
While still not at the 50-point mark, which indicates an equal number of builders view conditions as good versus poor, “Many builders are reporting increases in the number of serious buyers visiting their sales offices, and the overall confidence measure is much higher than it was at this time last year,” NAHB Chairman Barry Rutenberg said in a statement. “The concern is that, even though demand for new homes is rising, overly tight credit conditions are still constraining new building and new purchases at a time when that kind of economic activity and the job growth it generates are greatly needed.”
Rise in New Home Permits
In related news released Oct. 17 by the NAHB, the nationwide production and permitting of new homes rose sharply in September to their highest levels in more than four years. According to information from HUD and the U.S. Census Bureau, “a 15 percent gain brought the pace of new housing construction to a seasonally adjusted annual rate of 872,000 units, while an 11.6 percent gain brought the pace of permit issuance to 894,000 units. These were the strongest numbers seen in both categories since July of 2008,” the NAHB release stated.
“Today’s strong report corresponds with the significant gains we’ve seen in builder confidence over the past year, and confirms our view that a housing recovery is solidly underway in a growing number of markets nationwide,” NAHB Chief Economist David Crowe said in a statement. “That said, we are now almost at the half-way mark in terms of what would be considered a normal amount of new-home construction in a healthy economy, and we need to see consistent improvement like this over an extended period to get back to where the market should be in terms of generating jobs and economic growth.”
New housing construction grew in both the single-family and multi-family segments. Single-family housing construction grew 11 percent, to 603,000 units, while multi-family grew 25.1 percent to 269,000 units. The greatest gains were in the West, with only the Northeast posting a decline, according to NAHB.
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