The NAHB/Wells Fargo Housing Market Index showed increased confidence for the new single-family home market for the fifth consecutive month, rising to its highest point since 2007. Shorter-term growth has been significant as well, with builder confidence doubling since September, according to NAHB Chairman Barry Rutenberg .
The HMI measures confidence in three separate areas, aggregating them to arrive at an overall number. Those include: traffic of prospective buyers; sales expectations for the next six months; and current sales. Scores are derived from responses to a monthly survey conducted by NAHB. On the whole, the index rose from 25 to 29 during the month of February. A score of 50 or more indicates that more builders view conditions as good rather than poor.
Positive growth occurred in all three areas in February – traffic of prospective buyers rose from 21 to 22; current sales increased from 25 to 30; and expected sales confidence rose from 29 to 34.
Industry experts remain cautiously optimistic, however, as the market is still very much in a state of flux. The HMI, while improving, is still at low levels. In addition, significant gaps still exist between individual markets, with foreclosures hampering growth in many areas.