Economic Snapshot: Builder confidence at 11-year high

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) surged in September, rising to its highest level since before the housing market crash. And while housing starts were down this month, they are still up year over year.

Housing Market Index

Builder confidence jumped six points to 65 in September, up from a downwardly revised August reading of 59. This marks the highest HMI level since October 2005.

“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017.”

All three HMI components increased in September. The component measuring current sales expectations rose six points to 71 and the gauge charting sales expectations in the next six months increased five points to also stand at 71. The index measuring traffic of prospective buyers posted a four-point gain to 48.

The three-month moving averages for HMI scores posted gains in three of the four regions. The Northeast and South each registered a one-point gain to 42 and 64, respectively. The West rose four points to 73. The Midwest was unchanged at 55.

Housing starts

Privately owned housing starts were at a seasonally adjusted annual rate of 1,142,000 in August. This is 5.8 percent below the revised July estimate of 1,212,000 but is 0.9 percent above the August 2015 rate of 1,132,000.

Single-family housing starts were at a rate of 722,000 in August. This is 6.0 percent below the revised July figure of 768,000.

Privately owned housing completions were at a seasonally adjusted annual rate of 1,043,000 in August. This is 3.4 percent below the revised July estimate of 1,080,000 but is 8.3 percent above the August 2015 rate of 963,000.

Single-family housing completions were at a rate of 752,000 in August. This is 0.3 percent below the revised July rate of 754,000.

Existing home sales

Total existing home sales declined 0.9 percent to a seasonally adjusted annual rate of 5.33 million in August, down from a downwardly revised 5.38 million in July. After last month’s decline, sales are now at their second-lowest pace of 2016, but are still slightly higher than 2015.

The median existing home price for all housing types in August was $240,200, up 5.1 percent from the previous year. This marks the 54th consecutive month of year-over-year gains.

Total housing inventory at the end of August fell 3.3 percent to 2.04 million existing homes available for sale, and is now 10.1 percent lower than the previous year. Total housing inventory has declined YOY for 15 straight months. Unsold inventory is at a rate of 4.6 months at the current sales pace, down from 4.7 months in July.