The NAHB/Wells Fargo Housing Market Index (HMI) increased four points in February to 29, the highest level since April 2007. The increase marks the fifth consecutive month of an increase for a total of 15 points since recording a 14 in September 2011. All three components also recorded levels not seen since early 2007. The current and future sales components both increased six points to 31 and 35 respectively. The traffic component rose two points to 23. Three of the four regional indexes rose while the South indicator fell two points to 26.
The steady increase in the HMI supports other consistent positive advances in housing indicators including an eight consecutive month rise in three-month moving average housing starts, a similar steady climb in single-family housing permits, and a five month rise in the NAHB/First American Improving Markets Index.
The HMI closely tracks single-family housing starts over its history and NAHB expects single-family starts to rise slowly in 2012 to 500,000, a 16% improvement over 2011. The improvements will be scattered and strongest in markets where the mid-2000s crash did the least damage to the underlying housing and employment markets.