Builder confidence for newly built, single-family homes posted its seventh consecutive monthly gain in November, according to the National Association of Home Builders and Wells Fargo. The November score comes in at 46, marking the U.S. housing market index’s highest point reached since May 2006.
Scores above the 50 mark denote positive builder sentiments on the 1-100 scale.
According to CNBC, builder confidence, along with home sales figures, shows that the housing market recovery is both real and strengthening. Builders now see greater demand due to a drop in the supply of existing homes — 2.1 million now for sale, down 22 percent year-over-year. There are fewer distressed homes on the market due to more aggressive loan modifications under the robo-signing mortgage settlement. In addition, a fifth of the market is comprised of investors and one third of it is all cash, which creates competition for first-time buyers. Builders are getting these first-timers as clients.
“In view of the tightening supply and other improving conditions,” said NAHB Chairman Barry Rutenberg in the release, “many potential buyers who were on the fence are now motivated to move forward with a purchase in order to take advantage of today’s favorable prices and interest rates.”
Broken down into the builder index’s individual components, the biggest increase came in the one that measures current sales conditions: 49, up from 41 last month. This is its highest mark in the past six years. Sales expectations over the next six months maintained a score over 50 for the third month in a row, and the component measuring traffic of perspective buyers held steady at 35.
And broken down by region, the South came out on top with a score of 43, up from 39 last month. The Midwest and West both saw three-point gains to a respective 45 and 47, and the Northeast pulled ahead two points to 31 this month. — Zachary Kussin