Confidence among homebuilders just keeps soaring, reaching the highest level in seven years this month, according to the National Association of Home Builders monthly index.
The NAHB/Wells Fargo Housing Market Index is at 57, 5 points above where it was in June. A score of 50 marks the division from positive to negative sentiment. Last month was the first time the index was above 50 since April 2006.
It's all looking up
All three components of the index, which gauges perceptions of single-family homebuilders, increased in July. Current sales conditions, at 60, gained 5 points; sales expectations in the next six months increased 7 points to 67; and prospective buyer traffic rose 5 points to 45. Each of the three components had its strongest reading since late 2005.
The index's three-month moving averages were up for all four regions: The Northeast gained 4 points to 40, the Midwest had an 8-point gain to 54, the South posted a 5-point gain to 50, and the West measured a 3-point gain to 51.
Buying new because of a lack of used houses
NAHB chief economist David Crowe said in a release that builders are reporting that lack of existing homes for sale is driving more motivated buyers into new homes. "Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften," he added.
Searching for the cloud's gray lining
Rick Judson, chairman of the NAHB, confirmed in a release that July's report is positive across the board but sounded a cautionary note. "This positive momentum could be disrupted by threats on the policy side, particularly with regard to the mortgage interest deduction and federal support for the housing finance system," he said.
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