US homebuilders optimistic about demand, sales in 2014

December 17, 2013 04:15PM

Builder confidence is on the upswing ahead of the new year. The National Association of Home Builders/Well Fargo Housing Market Index rose four points in December to 58 — up 11 points since the same time last year and sustaining a score of more than 50 for the seventh straight month. The index looks at sales of newly built, single-family homes across the U.S.

The index for current sales conditions, one of the three factors that goes into determining the overall score, jumped six points to 64, and future sales expectations lifted by two points to 62. Prospective buyer traffic, meanwhile, was up three points to 44.

The numbers indicate that the growing demand is stable, analysts with investment bank Keefe, Bruyette & Woods told HousingWire. And the boom is only expected to continue, with a projected purchase volume growth of 5 percent in 2014.

“We believe home prices could rise by approximately 6.5 percent for the full year and by 2-4 percent from current levels driven by price increases that to date have yet to show up in closings, modest inventory levels in favorable markets and investor demand for distressed real estate,” an analyst with KBW told HousingWire.

That confidence is on the rise despite concerns about climbing interest rates and uncertainty kindled by the recent government shutdown, David Crowe, chief economist with the NAHB, told HousingWire. Since the end of the shutdown, the release of pent-up demand has buoyed the uptick, he said. [HousingWire]Julie Strickland