Builder Sentiment Up Again

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.



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  1. I still don’t think its getting better and if wells Fargo has anything to do with it it makes me more sceptical . I lve in a affulent area of Philadelphia and I don’t see much activity here at all. I’ve been in the trades for over thirty years and I would consider things dire. I feel you guys are putting out propaganda for our current goverment administrative officials. That’s not your job. It’s to tell the truth to builders

    • The HMI is based strictly on a representative panel of builders reporting on housing market conditions in their areas. The survey on which the HMI is based has been conducted in a consistent manner since 1985, and the process of calculating the HMI has not changed since it was inaugurated in 1995. In particular, no changes in methodology were made when Wells Fargo began sponsoring the HMI, which remains a product strictly of NAHB Economics that is never seen or influenced by any outside party prior to its release. Nor does the methodology of the HMI or the way of reporting it vary depending on the administration in power at a particular time.

  2. Is there any reason the index for the west showed such a large increase? This almost looks like it could be an error.

    • The increase in the West was not an error. Although we are unaware of a specific event driving the result, we checked it several ways for consistency. Every state in the West with enough responses to check showed a similar increase. The January-to-February increase in the West was also essentially the same when the analysis was limited to builders who responded to the survey in both months, or done without seasonal adjustment. We note that in February both the West & Midwest reverted to levels last seen in mid-2006, so two of the four regions were similar in this respect.

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